Financial report 2022
01
Financial report 2022
|
The Vancouver Fraser Port Authority
Financial Report 2022 provides an
overview and analysis of our financial
results. The analysis throughout uses
Canadian dollars.
About this report
02
|
Vancouver Fraser Port Authority
Year in review
Port of Vancouver cargo volumes
Overall cargo volume in 2022 was 141 million tonnes, which was down 3% from the 2021
volume of 146 million metric tonnes.
Auto sector volume was 333,734 units, a 6% decrease compared
to 2021, mainly driven by supply-side production and distribution
issues in the first half of 2022.
Breakbulk volume was flat at 20 million metric tonnes. Lower
domestic volumes were offset by higher imports of steel products.
Autos
Breakbulk
Bulk volume was 99 million metric tonnes, a 3% decrease compared
to 2021, largely driven by a 23% decline in grain volumes. Coal, potash,
and sulphur volumes increased by 6%, 11%, and 22% respectively.
Bulk
Container volume was 4 million 20-foot equivalent units (TEUs),
a 3% decrease from the record volume seen in 2021.
Container
Cruise business returned in 2022 with 810,090 passengers
after a two-year hiatus due to Canada-wide COVID-19 pandemic
restrictions implemented by the federal government.
6
%
3
%
3
%
–
–
Cruise
Auto (units)
Breakbulk (metric tonnes)
Bulk (metric tonnes)
Containerized (metric tonnes)
Total tonnage (metric tonnes)
Containers (TEUs)
Cruise passengers
425
18,209
101,795
26,662
147,091
3,396
889
420
17,165
99,697
26,923
144,204
3,399
1,071
345
16,731
101,770
26,604
145,451
3,468
–
356
19,793
101,719
24,605
146,474
3,679
–
334
19,828
99,029
22,226
141,416
3,557
810
Operating highlights (000s) 2018 2019 2020 2021 2022
Strategic capital investments
The Vancouver Fraser Port Authority continues to invest in capital projects to support the growth of Canada’s trade and
help address supply-chain congestion, while minimizing the impact of trade on local communities and the environment.
Key projects in 2022 included:
Centerm Expansion Project and South Shore Access Project Construction at the Centerm
container terminal was substantially completed in 2022, which included expanding the terminal
footprint by 15%, reconfiguring the container yard, building a new operations facility, and local marine
habitat improvements. Once fully optimized, the terminal’s capacity will increase by 60%. Work
continued on the associated South Shore Access Project, which involves improving port road and
rail infrastructure around Centerm and other nearby terminals and providing direct access to the
Trans-Canada Highway.
Roberts Bank Terminal 2 Project This proposed marine container terminal has been developed
under the port authority’s public interest mandate to meet Canada’s growing trade needs. In 2022,
we continued to advance environmental studies, sign additional mutual benefit agreements with
Indigenous groups, and engage with industry and the community as we progress through the federal
assessment process that began in 2013.
Highway 91/17 Upgrade Project The port authority contributed funding to this provincially led
project that will improve traffic safety and efficiency along key provincial highway routes connected
to the Roberts Bank Trade Area.
Temporary empty container storage facility Partially funded under the National Trade Corridors
Fund, we developed a temporary storage site on our existing land for empty shipping containers to help
clear supply-chain backlogs that resulted from rail service disruptions caused by the severe flooding in
November 2021, which fully cut off the Port of Vancouver from national supply chains for eight days.
Richmond Logistics Hub This project focuses on preparing underdeveloped port land to increase
capacity and improve the flow of goods through the logistics hub in Richmond. In 2022, we continued
to prepare multiple sites within the hub for future development of trade-enabling facilities.
Gateway infrastructure projects In 2022, we continued to advance multiple road and rail
infrastructure projects throughout the Lower Mainland, partly funded by the Government of Canada
through the National Trade Corridors Fund and partly funded by industry. These projects will improve
the movement of cargo in the region, help get Canadian goods to market efficiently, create well-paying
jobs, and improve safety and traffic flow for communities. Construction on the Commissioner Street
Road and Rail Realignment Project in Vancouver, and the rail component of the Burnaby Rail Corridor
Improvements Project were completed in 2022.
Vancouver Fraser Port Authority
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Vancouver Fraser Port Authority
Messages
As Canada’s largest port, the Port of Vancouver is an
economic powerhouse. The Vancouver Fraser Port
Authority is federally mandated to enable trade
through the port while protecting the environment
and considering communities. In overseeing the
port’s long-term success and sustainability, the port
authority fulfills a vital role for Canada’s economy.
The port authority’s board of directors, in turn,
provides oversight and strategic guidance to the port
authority to help it deliver on its mandate. Each of us
on the board is proud to support the port authority’s
work, for the benefit of all Canadians.
I am pleased to present the Vancouver Fraser Port
Authority Financial Report 2022, which details 2022
trade volumes across the Port of Vancouver’s diverse
cargo sectors, the port authority’s financial position,
and the strategic capital investments the port
authority has made to support Canada’s long-term
trade growth.
Against a backdrop of complex trade challenges
in 2022, the steady results in this report are a
testament to the port authority’s effective stewardship
of the port, in conjunction with the exceptional work
by industry and the port’s workforce moving goods
through the port.
With Canada’s west coast ports projected to run out
of container capacity by the mid- to late 2020s, in
2022, the port authority continued to advance the
Roberts Bank Terminal 2 Project, a proposed new
container terminal in Delta, through the final stages
of the federal environmental assessment process.
The project is Canada’s opportunity to provide timely
capacity for our country’s growing trade needs;
to support the success of Canada’s Indo-Pacific
Strategy, which expands trade with a region on track
to account for 50% of the world’s GDP by 2040;
and to strengthen reliable access to goods that
Canadians use every day.
In the spring of 2023, the port authority welcomed
the Government of Canada’s approval of the project,
which is a significant step forward for the project and
towards a stronger trade future for Canada.
As we reflect on 2022, on behalf of the board
of directors, I would like to thank the full port
community for their remarkable work, in a
challenging year, that has supported these resilient
financial results. I would also like to thank Robin
Silvester, his executive leadership team, and the port
authority’s dedicated employees for their ongoing
work to advance the organization’s strategic
priorities, to enable Canada’s trade objectives, and
to benefit Canadians across the country.
Judy Rogers
Chair, Board of Directors
Message from the chair, board of directors
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Financial report 2022
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The trade landscape in 2022 remained complex,
including layered supply-chain challenges and
grain-sector impacts in the first half of the year, due
to Canada’s 2021 drought-affected harvest. Despite
these headwinds, one of the Port of Vancouver’s
foundational strengths—the most diversified cargo-
handling abilities of any port in North America—
continued to provide resilience in trade flows.
Lower grain volumes through mid-year were
substantially offset in the second half of the year by
a strong fourth-quarter grain rebound; the second-
highest annual container and potash volumes to date;
and record coal volumes, resulting in 141 million
metric tonnes handled through the port overall in
2022, a 3% decrease from 2021. Additionally in
2022, after a two-year hiatus due to pandemic
restrictions, Vancouver’s port community and tourism
partners welcomed the restart of cruising in Canada
for what proved to be a strong comeback season,
including a record 307 cruise ship visits, a 7% increase
compared to 2019.
The return of cruise revenues helped drive an 11.1%
increase in overall revenues and a 10.5% increase
in EBITDA, helping enable the Vancouver Fraser Port
Authority’s $233 million in capital investments in
2022, centrally infrastructure and trade-enabling
land, up from $208 million invested in 2021.
In 2022, we were pleased to have reached substantial
completion of construction on the Centerm Expansion
Project, also in the container sector, as well the
Commissioner Street Road and Rail Alignment
Project, part of a suite of nearly $1 billion in road
and rail projects that we are leading, in partnership
with government and industry, to strengthen the
region’s trade corridors.
With the coming forecasted capacity crunch at
Canada’s west coast container terminals, the port
authority continued to advance the proposed Roberts
Bank Terminal 2 (RBT2) Project, which is of vital
importance to Canada’s trade future through this
gateway. After a public comment period ended in
March 2022, we provided a final submission to the
Impact Assessment Agency of Canada to show how
topics raised through that period will be addressed.
We continued to build positive, long-lasting relationships
with Indigenous groups and were proud to have 24
RBT2-related Mutual Benefits Agreements (MBAs)
with Indigenous groups in place by the end of 2022,
and two additional MBAs signed in early 2023.
In April 2023, we welcomed the Government of
Canada’s approval of RBT2, following a rigorous
environmental assessment process that started in 2013.
With this landmark project milestone achieved, we will
now work toward obtaining other applicable approvals
and permits to advance the project and support a strong
future for Canada’s west coast container trade.
As we consider the future, the port’s enduring role
powering the Canadian economy and the port
authority’s strong financial results, investments, and
leadership at Canada’s largest port underscore the
organization’s unique position and capability to drive
long-term trade success through this gateway, in
close partnership with port industry, for the benefit
of all Canadians.
Robin Silvester
President and CEO
Message from the president and CEO
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|
Vancouver Fraser Port Authority
About us
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Financial report 2022
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About the Vancouver Fraser Port Authority
Mission and vision
Our mission is to enable Canada’s trade objectives,
ensuring safety, environmental protection, and
consideration for local communities.
Our vision is for the Port of Vancouver to be the
world’s most sustainable port.
We believe a sustainable port delivers economic
prosperity through trade, maintains a healthy
environment, and enables thriving communities
through collective accountability, meaningful
dialogue, and shared aspirations.
The Vancouver Fraser Port Authority is the federal agency responsible for the
shared stewardship of the lands and waters that make up the Port of Vancouver,
Canada’s largest port.
As a Canada Port Authority, our mandate is to enable Canada’s trade through
the Port of Vancouver while protecting the environment and considering local
communities. Accountable to the federal minister of transport, Canada Port
Authorities manage federal lands and waters in support of national trade
objectives for the benefit of all Canadians. At the Vancouver Fraser Port
Authority, we do this by leasing the federal lands that make up the Port of
Vancouver, and by providing marine, road, and other infrastructure to support
port growth, function, and operation.
Economic prosperity through trade
Competitive business
Effective workforce
Strategic investment and asset management
Healthy environment
Healthy ecosystems
Climate action
Responsible practices
Thriving communities
Good neighbour
Community connections
Indigenous relationships
Safety and security
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|
Vancouver Fraser Port Authority
Borrowing limit and credit rating
The Vancouver Fraser Port Authority continues to
maintain a strong AA (stable) credit rating from
Standard & Poor’s Ratings Services. This consistent
strong credit rating and stable outlook helps us
attract lenders and optimize our borrowing costs in
support of our investment in the gateway. In 2021,
our Letters Patent was updated to increase our
permitted borrowing limit from $0.51 billion to
$1.03 billion. To accommodate growing trade
through Canada’s largest port, this increase in
borrowing limit aligns with the port authority’s
strategic plan to continue to fund infrastructure
capacity expansion within the port and the
surrounding gateway.
Existing credit facilities
Committed revolving credit facilities:
Subsequent to increasing our borrowing limit, in
October 2021 the port authority increased its
committed revolving credit facilities from $0.5 billion
to $0.8 billion with three banks. All committed
revolving credit facilities mature in March 2026.
As of December 31, 2022, a total of $0.2 billion
was drawn on these three committed revolving
credit facilities.
Letter of credit: The port authority holds letters
of credit under a sub-facility to support various
commitments relating to port-related projects and
the delayed funding of our pension plan solvency
deficit. As of December 31, 2022, letters of credit
in the amount of $0.01 billion were outstanding.
Subsidiary credit facilities
Port of Vancouver Terminals Ltd.: Under one of
the bank’s committed revolving credit facilities, the
subsidiary has an outstanding uncommitted demand
non-revolving loan that matures in March 2026.
As of December 31, 2022, the outstanding balance
was $0.7 million.
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Financial report 2022
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2022 financial
results
Consolidated summary
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|
Vancouver Fraser Port Authority
2022 financial results
Consolidated summary
Net income
Add: Depreciation
Add: Other expenses (income)
EBITDA
$ 106,050
37,947
5,359
149,356
$ 90,438
39,715
5,012
135,165
15,612
(1,768)
347
14,191
17.3%
(4.5%)
6.9%
10.5%
(000s)
2022 2021
Increase
(decrease) $
Increase
(decrease) %
Consolidated EBITDA increased by 10.5% to $149 million in 2022, primarily due to the resumption of the
cruise season, offset by higher internal and external costs to advance the port authority’s strategic initiatives.
Net income increased by 17.3% due to the higher EBITDA.
Revenue
Operating expenses
EBITDA
Capital investments
$ 274,453
$ 143,928
$ 166,260
$ 136,238
$ 301,318
$ 155,510
$ 183,668
$ 190,526
$ 274,082
$ 153,922
$ 158,511
$ 315,377
$ 274,671
$ 179,221
$ 135,165
$ 207,511
$ 305,099
$ 193,690
$ 149,356
$ 233,382
Financial highlights
(000s)
2018 2019 2020 2021 2022
Consolidated revenues
increased 11.1% to
$305.1 million in
2022, compared to
$274.7 million in 2021.
Revenue
11.1
%
Consolidated earnings before
interest, taxes, depreciation,
and amortization (EBITDA)
increased 10.5% to
$149.4 million in 2022.
EBITDA
10.5
%
12.5
%
Capital investment
Capital investments relating
to property and equipment
totalled $233.4 million
for 2022, compared to
$207.5 million in 2021.
Management discussion and analysis
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Financial report 2022
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Operating revenue comprises rent, fees, and
other income. Operating revenue for 2022 was
$305.1 million, which is 11.1% higher than 2021.
Overall, fixed rent accounts for more than half of our
operating revenues, providing protection against
fluctuations in trade volumes. In 2022, rental revenue
increased by 8.1% over the prior year, mainly from an
increase in fixed rent.
Fee revenue includes wharfage, cruise fees, harbour
dues, Gateway Infrastructure Fees, and berthage.
This revenue recovers ongoing operating costs
and investments made to support trade activities
at the port.
The following table summarizes the key drivers,
methodology, and purpose of each of these fees.
Operating revenue
Below is a further breakout of operating revenue.
Fixed rent
Variable rent
Rental revenue
Wharfage
Cruise
Harbour dues
Gateway Infrastructure Fee
Berthage
Log revenues
Fee revenues
Other revenue
Operating revenue
$ 173,271
23,495
196,766
43,265
17,484
10,560
8,104
8,713
10
88,136
20,197
305,099
$ 156,325
25,744
182,069
46,606
–
10,372
9,404
8,025
11
74,418
18,184
274,671
16,946
(2,249)
14,697
(3,341)
17,484
188
(1,300)
688
(1)
13,718
2,013
30,428
10.8%
(8.7%)
8.1%
(7.2%)
–
1.8%
(13.8%)
8.6%
(9.1%)
18.4%
11.1%
11.1%
(000s)
2022 2021
Increase
(decrease) $
Increase
(decrease) %
Fixed rent 57%
Variable rent 8%
Wharfage 14%
Harbour dues 3%
Gateway infrastructure
fee 3%
Berthage 3%
Cruise 6%
Other revenue 6%
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Vancouver Fraser Port Authority
2022 financial results
Operating expenses
The port authority’s significant expense items are noted in the following table.
Salaries and employee benefits
Depreciation
Other operating and administrative
expenses
Professional fees and consulting
services
Dredging
Payments in lieu of taxes
Maintenance and repairs
Federal stipend
Operating expenses
(000s)
$ 64,681
37,947
35,025
18,583
14,898
8,557
5,875
8,124
193,690
2022
$ 60,887
39,715
29,823
19,824
10,860
7,201
3,395
7,516
179,221
2021
3,794
(1,768)
5,202
(1,241)
4,038
1,356
2,480
608
14,469
Increase
(decrease) $
6.2%
(4.5% )
17.4%
(6.3% )
37.2%
18.8%
73.0%
8.1%
8.1%
Increase
(decrease) %
Overall, fee revenue in 2022 increased by
$13.7 million from an increase in cruise, partially
offset by a decrease in wharfage and Gateway
Infrastructure Fees. There was no cruise season
in 2021, as the federal government had prohibited
cruise ships in Canadian waters due to the
COVID-19 pandemic. Wharfage fees decreased by
$3.3 million from lower volumes during the year.
Other revenue increased by 11.1% in 2022, primarily
due to higher interest revenue on cash balances
from higher rates.
Fee revenue
Wharfage
Harbour dues
Berthage
Cruise fees
Gateway
Infrastructure
Fee
Truck Licensing
System program
charges
Calculation key driver
Rate x unit
Rate x gross registered
tonne
Rate x overall ship length
x time at berth
Passenger fee = rate x
number of passengers
Service and facilities fee =
rate x overall ship length x
time at berth
Rate x unit
Licence fee based on
number of trucks
Details of calculation
Unit rate applied is per
thousand foot board measure
(MFBM), tonne, or 20-foot
equivalent unit (TEU)
Charged on first five calls;
discounts for participating
in the EcoAction Program
Unit rate applied is based on
location and duration of stay
Rates vary for days of the
week and duration of stay
Unit rate applied is per
MFBM, tonne, or TEU
Annual fee depends on the
number of approved trucks
Purpose of fee
To recover investments and
costs associated with the
provision of port infrastructure
and services to handle cargo
To recover investments and
costs associated with harbour
operations, as well as harbour
safety, security, and cleanliness
To recover investments and
costs associated with the
wharf apron, berth dredging,
and maintenance
To recover investments and
costs associated with the
provision of cruise terminal
facilities, berths, and
infrastructure
To recover investments and
costs related to infrastructure
improvements in three trade
areas
To recover investments and
costs related to the Truck
Licensing System program
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Financial report 2022
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The port authority’s operating expenses increased
by 8.1% over the previous year. This change was
primarily due to salaries and employee benefits, other
operating and administrative expenses, and higher
dredging volumes.
Salaries and employee benefits increased by
$3.8 million due to inflationary salary increases, an
increase in head count to advance the port authority’s
strategic initiatives and operational needs, and
increases in salaries and bonuses.
Other operating and administrative expenses increased
by $5.2 million, mainly from an increase in cruise-
related costs and higher information system costs.
To provide safe and unimpeded access to terminals
and to allow vessels to navigate through the Fraser
River channel, the port authority carries out an annual
maintenance dredging program to remove sediment
and sand. The recovered sand is then sold and used
for preload in local construction projects. The volume
of sand removal and sales can vary from year to year.
Compared to 2021, net dredging expenses in 2022
increased by $4.0 million, due to higher dredging
activity resulting from higher fuel costs, a larger
freshet, and related increased sand and gravel in
the channel.
Repair and maintenance increased by $2.5 million,
primarily due to increased cruise-related
maintenance and repairs, and other revenue-
generating tenant services.
The port authority is exempt from income taxes, but
it is obligated to pay an annual federal stipend to the
minister of transport under the Canada Marine Act
of $8.1 million in 2022. The stipend is calculated by
reference to gross revenues at rates varying between
2% and 6%, depending on the gross amount determined.
Other expenses (income)
The port authority’s significant non-operating items are noted in the following table.
The port authority’s other expenses increased by
$0.3 million over the previous year, primarily due to the
loss on disposal of assets offset by non-recurring costs in 2021.
Finance costs
Investment income
Loss (gain) on disposal of assets
Other expenses (income)
Other expenses
1,195
93
3,507
(4,448)
347
$ 2,508
(1,168)
4,005
14
5,359
$ 1,313
(1,261)
498
4,462
5,012
91.0%
(7.4%)
n/a
(99.7%)
6.9%
(000s)
2022 2021
Increase
(decrease) $
Increase
(decrease) %
Maintenance & repairs 2%
Federal stipend and payment in lieu of taxes 9%
Professional fees and consulting services 10%
Net dredging expenses 8%
Other operating and administrative expenses 18%
Depreciation 20%
Salaries and employee benefits 33%
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|
Vancouver Fraser Port Authority
Audited
summary
financial
statements
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Financial report 2022
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16
|
Vancouver Fraser Port Authority
Independent auditor’s report
To the Directors of the Vancouver Fraser Port Authority and
the Minister of Transport, Government of Canada
Our opinion
In our opinion, the accompanying summary consolidated financial
statements of Vancouver Fraser Port Authority and its subsidiaries
(together, the VFPA) are consistent, in all material respects, with
the audited consolidated financial statements, on the basis
described in note 2 to the summary consolidated financial
statements.
The summary consolidated financial statements
The VFPA’s summary consolidated financial statements derived
from the audited consolidated financial statements for the year
ended December 31, 2022 comprise:
· the summary consolidated statement of financial position as at
December 31, 2022;
· the summary consolidated statement of comprehensive income
for the year then ended;
· the summary consolidated statement of changes in equity for
the year then ended;
· the summary consolidated statement of cash flows for the year
then ended; and
· the related notes to the summary consolidated financial
statements.
The summary consolidated financial statements do not contain
all the disclosures required by International Financial Reporting
Standards as issued by the International Accounting Standards
Board (IFRS). Reading the summary consolidated financial
statements and the auditor’s report thereon, therefore, is not a
substitute for reading the audited consolidated financial
statements and the auditor’s report thereon.
The audited consolidated financial statements and our
report thereon
We expressed an unmodified audit opinion on the audited
consolidated financial statements in our report dated
March 31, 2023. That report also includes an Emphasis of
matter paragraph that draws attention to note 2(r) in the
audited consolidated financial statements, which describes
the restatement of certain comparative information.
Management’s responsibility for the summary
consolidated financial statements
Management is responsible for the preparation of the summary
consolidated financial statements on the basis described in note 2
to the summary consolidated financial statements.
Auditor’s responsibility
Our responsibility is to express an opinion on whether the
summary consolidated financial statements are consistent, in
all material respects, with the audited consolidated financial
statements based on our procedures, which were conducted
in accordance with Canadian Auditing Standard (CAS) 810,
Engagements to Report on Summary Financial Statements.
Chartered Professional Accountants
Vancouver, British Columbia
March 31, 2023
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Financial report 2022
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Summary consolidated statement of financial position
(expressed in thousands of Canadian dollars)
2022 2021
(Restated –
note 2(s))
Assets
Current assets
Cash and cash equivalents $ 80,874 $ 80,445
Accounts receivable and other assets 53,325 55,884
134,199 136,329
Non-current assets
Long-term receivables and other assets 66,717 72,886
Deferred charges 3,090 1,872
Intangible assets 157,500 137,145
Property and equipment 2,324,530 2,151,678
Total assets $ 2,686,036 $ 2,499,910
Liabilities and shareholders’ equity
Current liabilities
Accounts payable and accrued liabilities $ 102,654 $ 109,553
Provisions 6,451 7,999
Deferred revenue 21,309 16,609
Borrowings (note 4) 701 801
131,115 134,962
Non-current liabilities
Other employee benefits 1,615 1,648
Net benefit liability 2,951 4,981
Provisions 12,316 10,650
Deferred revenue 72,868 74,779
Borrowings (note 4) 199,656 114 , 94 2
Other long-term liabilities 10,919 11, 6 0 5
Total liabilities 431,440 353,567
Shareholders’ equity
Contributed capital 150,259 150,259
Retained earnings 2,104,337 1,996,084
Total shareholders’ equity 2,254,596 2,146,343
Total liabilities and shareholders’ equity $ 2,686,036 $ 2,499,910
Commitments and contingent liabilities (notes 5 and 6)
Bruce Chan, Director
Summary consolidated statement of financial position
Vancouver Fraser Port Authority
As at December 31, 2022
The accompanying notes are an integral part of these summary consolidated financial statements.
Approved on behalf of the board of directors
Robin Silvester, President and CEO
|
Vancouver Fraser Port Authority
18
Summary consolidated statement of comprehensive income
(expressed in thousands of Canadian dollars)
2022 2021
Revenue
Rental revenue $ 196,766 $ 182,069
Fee revenue 88,136 74,418
Other revenue 20,197 18,184
305,099 274,671
Expenses
Wages, salaries, and benefits 64,681 60,887
Depreciation and amortization 37,947 39,715
Other operating and administrative expenses 35,025 29,823
Professional fees and consulting services 18,583 19,824
Dredging expenses 14,898 10,860
Repairs and maintenance 5,875 3,395
Payments in lieu of taxes 8,557 7,201
Federal stipend 8,124 7,516
193,690 179,221
Income from operations 111,409 95,450
Other expense (income)
Finance costs 2,508 1,313
Loss on disposal of assets 4,005 498
Investment income (1,168) (1,261)
Other loss 14 4,462
5,359 5,012
Net income 106,050 90,438
Other comprehensive income
Item that will not be reclassified to net income
Actuarial gains in defined benefit pension plans 2,203 5,305
Total comprehensive income $ 108,253 $ 95 ,74 3
Summary consolidated statement of comprehensive income
Vancouver Fraser Port Authority
For the year ended December 31, 2022
The accompanying notes are an integral part of these summary consolidated financial statements.
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Financial report 2022
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Summary consolidated statement of changes in equity
(expressed in thousands of Canadian dollars) Contributed Retained
capital earnings Total
Balance – December 31, 2020 $ 150,259 $ 1,900,341 $ 2,050,600
Net income — 90,438 90,438
Other comprehensive income
Actuarial gains in defined benefit pension plans — 5,305 5,305
Balance – December 31, 2021 150,259 1,996,084 2,146,343
Net income — 106,050 106,050
Other comprehensive income
Actuarial gains in defined benefit pension plans — 2,203 2,203
Balance – December 31, 2022 $ 150,259 $ 2,104,337 $ 2,254,596
Summary consolidated statement of changes in equity
Vancouver Fraser Port Authority
For the year ended December 31, 2022
The accompanying notes are an integral part of these summary consolidated financial statements.
|
Vancouver Fraser Port Authority
20
Summary consolidated statement of cash flow
The accompanying notes are an integral part of these summary consolidated financial statements.
(expressed in thousands of Canadian dollars)
2022 2021
(Restated –
note 2(s))
Cash provided by (used in)
Operating activities
Net income $ 106,050 $ 90,438
Adjustments to reconcile net income to net cash from operations:
Depreciation and amortization 37,947 39,715
Loss on disposal of assets 4,005 498
Provisions (1,754) 568
Net employee benefits 138 6
Other 558 84
146,944 131,309
Changes in non-cash operating working capital:
Accounts receivable and other assets (2,916) (3,514)
Accounts payable and accrued liabilities 5,065 (35,741)
Deferred revenue 5,500 30,486
Long-term lease receivable and lease liability (5,660) (3,908)
148,933 118 , 6 3 2
Investing activities
Acquisitions and construction of property and equipment (224,379) (201,226)
Acquisitions of intangible assets (34,374) (65,139)
Deposits – (1,840)
Government funding for property and equipment, and intangible assets 19,324 58,642
Other third-party funding for intangible assets 5,363 3 ,974
Net change in long-term receivables 951 865
Principal repayment on lease financing assets – 23
Proceeds from disposal of property and equipment – 144
Other 193 205
(232,922) (204,352)
Financing activities
Repayments of short-term borrowings (100) (100)
Proceeds from long-term borrowings 94,714 104,955
Repayments of long-term borrowings (10,000) (10,000)
Payments of lease liabilities (196) (197)
84,418 94,658
Increase in cash and cash equivalents 429 8,938
Cash and cash equivalents, beginning of year 80,445 71,507
Cash and cash equivalents, end of year $ 80,874 $ 80,445
Supplemental cash flow information
Interest paid 4,649 890
Investment income received 1,269 1,414
Summary consolidated statement of cash flows
Vancouver Fraser Port Authority
For the year ended December 31, 2022
21
Financial report 2022
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Notes to the summary consolidated financial statements
1. Nature of operations
The Vancouver Fraser Port Authority (VFPA) is a non-share capital, financially self-sufficient authority established on January 1, 2008
by the Government of Canada pursuant to the Canada Marine Act (Act). The address of the VFPA’s registered office is
100 – 999 Canada Place, Vancouver, British Columbia. The VFPA is the federal agency responsible for the stewardship of
the Port of Vancouver. Consistent with all Canada Port Authorities, the VFPA is accountable to the federal minister of transport
and operates pursuant to the Act with a mandate to enable Canada’s trade through the Port of Vancouver, while protecting the
environment, and considering local communities. The VFPA has control over the use of port land and water, which includes more
than 16,000 hectares of water, over 1,000 hectares of land, and approximately 350 kilometres of shoreline. Located on the
southwest coast of British Columbia, Canada, the Port of Vancouver extends from Roberts Bank and the Fraser River up to and
including Burrard Inlet, bordering 16 Lower Mainland municipalities, one Treaty First Nation, and borders and intersects the asserted
and established territories of several Coast Salish First Nations.
The VFPA and its wholly owned subsidiaries, Canada Place Corporation (CPC), Port of Vancouver Ventures Ltd. (PoVV), Port of
Vancouver Holdings Ltd. (PoVH), Port of Vancouver Enterprises Ltd. (PoVE), Port of Vancouver Terminals Ltd. (PoVT), Marine Safety
Holdings Ltd. (MSH), 1359792 B.C. Ltd., and 1381641 B.C. Ltd. are exempt from income taxes as the VFPA, on a consolidated basis,
pays a gross revenue charge (federal stipend) as required per the Letters Patent under the authority of the Act.
2. Basis of presentation and significant accounting policies
a) Basis of presentation
The VFPA has prepared the summary consolidated financial statements using the following criteria:
· The summary consolidated financial statements include a statement for each statement included in the audited consolidated
financial statements and certain note disclosures, which are presented in thousands of Canadian dollars unless otherwise
indicated
· Information in the summary consolidated financial statements agrees with the related information in the completed set of
audited consolidated financial statements
· Major subtotals, totals, and comparative information from the audited consolidated financial statements are included
· The summary consolidated financial statements contain the information from the audited consolidated financial statements
dealing with matters having a pervasive or otherwise significant effect on the summary consolidated financial statements
b) Audited financial statements
· The audited consolidated financial statements were prepared in accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB) and interpretations issued by the International
Financial Reporting Interpretations Committee (IFRIC)
· The audited consolidated financial statements and summary consolidated financial statements were approved and authorized
for issue by the VFPA board of directors on March 31, 2023
c) Consolidation
These summary consolidated financial statements consolidate the accounts of the VFPA and its wholly owned subsidiaries.
Subsidiaries are all entities over which the VFPA has control. The VFPA controls an entity when it has power to govern the financial
and operating policies of the entity; it is exposed to, or has rights to variable returns from performance of the entity, and has the
ability to affect those returns through its control over the entity. Subsidiaries are fully consolidated from the date that VFPA
obtains control and continues to be consolidated until the date that such control ceases to exist.
All intercompany balances and transactions are eliminated on consolidation. The financial statements of subsidiaries are prepared
for the same reporting period as the VFPA, using consistent accounting policies.
Notes to the summary consolidated financial statements
Vancouver Fraser Port Authority
December 31, 2022
(figures in the tables are expressed in thousands of Canadian dollars)
|
Vancouver Fraser Port Authority
22
Notes to the summary consolidated financial statements
d) Cash and cash equivalents
Cash and cash equivalents include cash on deposit with banks, short-term deposits with maturities of 90 days or less, and
demand deposits with restrictions from third party contracts when acquired that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of changes in value.
e) Trade and other receivables
Trade and other receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective
interest method, less provision for impairment.
f) Financial instruments
A financial instrument is any contract that gives rise to a financial asset or a financial liability.
i) Financial assets
Financial assets are classified as measured at either amortized cost, fair value through other comprehensive income (OCI),
or fair value through profit or loss. The classification is based on the contractual cash flow characteristics of the financial
assets and the VFPA’s business model for managing those financial assets.
Recognition and measurement
At amortized cost
The VFPA’s financial assets measured at amortized cost include cash and cash equivalents, accounts receivable, and other
assets and long-term receivables, and other assets. With the exception of trade receivables that do not contain a significant
financing component, these financial assets are recognized initially at fair value plus directly attributable transaction costs,
if any. After initial recognition, they are measured at amortized cost when they are held for collecting contractual cash flows,
where those cash flows solely represent payments of principal and interest using the effective interest method less any
impairment as described below. The effective interest method calculates the amortized cost of a financial asset and allocates
the finance income over the term of the financial asset using an effective interest rate. The effective interest rate is the rate
that discounts estimated future cash receipts through the expected life of the financial asset, or a shorter period when
appropriate, to the gross carrying amount of the financial asset.
Derecognition
Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have
been transferred, and the VFPA has transferred substantially all the risks and rewards of ownership. Gains or losses are
recognized in net income when the financial asset is derecognized or impaired.
The VFPA does not have any financial assets classified as fair value through OCI or fair value through profit or loss.
Impairment of financial assets
The VFPA recognizes a loss allowance for expected credit losses (ECLs) on financial assets measured at amortized cost.
At the end of each year, the loss allowance for the financial assets, except for trade receivables without a significant financing
component, is measured at an amount equal to the lifetime ECL if the credit risk on that financial asset has increased
significantly since initial recognition. If it is determined that the credit risk on a financial asset has not increased significantly,
the VFPA measures the loss allowance for that financial asset at an amount equal to the 12-month ECL.
For trade receivables without a significant financing component, the VFPA applies a simplified approach and uses a provisions
matrix, which is based on the VFPA’s historical credit loss experience and forward-looking information, to estimate and
recognize the lifetime ECL. Any subsequent changes in the lifetime ECL will be recognized immediately in the summary
consolidated statement of comprehensive income.
2. Basis of presentation and significant accounting policies
(Continued)
23
Financial report 2022
|
2. Basis of presentation and significant accounting policies (Continued)
ii) Financial liabilities
Financial liabilities are classified as measured at amortized cost or fair value through profit or loss.
Financial assets and financial liabilities are presented on a net basis when the VFPA has a legally enforceable right to offset
the recognized amounts and intends to settle on a net basis or to realize the asset and settle the liability simultaneously.
Recognition and measurement
At amortized cost
The VFPA’s financial liabilities measured at amortized cost include accounts payable and accrued liabilities, provisions, other
long-term liabilities, borrowings and other non-derivative financial liabilities, and are recognized on the date at which the VFPA
becomes a party to the contractual arrangement. Financial liabilities are designated as held-for trading on initial recognition
or it is a derivative and are measured at fair value and the net gains and losses including interest expense are recognized
in profit and loss. Financial liabilities are recognized initially at fair value including discounts and premiums, plus directly
attributable transaction costs, such as issue expenses, if any. Subsequently, these financial liabilities are measured at
amortized cost using the effective interest method.
Derecognition
Financial liabilities are derecognized when the contractual obligations are discharged, cancelled, or expire. Gains or losses are
recognized in net income when the financial liability is derecognized.
The VFPA does not have any financial liabilities classified as fair value through profit or loss.
g) Intangible assets
i) Gateway infrastructure
The VFPA incurs costs associated with the development of gateway infrastructure assets such as overpasses and road
expansions to support trade. Costs can include construction, engineering, project management and other direct project costs
less any third-party contributions.
The VFPA does not control or maintain all assets on completion but receives fees to recover its costs incurred. As the VFPA
has the ability to set those fees, the gateway investment costs are recognized as intangible assets when capitalization criteria
are met. Accordingly, these assets are recorded as a finite lived intangible asset and are amortized over the period that fees
are collected.
ii) Computer software
Computer software costs are capitalized as intangible assets if they are identifiable, separable or arise from contractual or
legal rights and are amortized over their estimated useful lives of five years or less. Costs associated with maintaining
computer software programs are recognized as an expense when incurred.
h) Property and equipment
Property and equipment are initially recorded at cost less accumulated amortization and impairment losses, if any. Costs that are
directly attributable to the acquisition of the asset are capitalized and include land survey costs, materials, contractor expenses,
internal labour, borrowing costs on qualifying assets, and site restoration or removal costs. Costs continue to be capitalized until
the asset is available for use with subsequent costs capitalized only when it is probable that future economic benefits associated
with the item will flow to the VFPA.
The VFPA capitalizes interest during construction of a qualifying asset using the weighted average cost of debt incurred on the
VFPA’s borrowings. Qualifying assets are considered those that take a substantial period of time to construct.
At December 31, 2022, property and equipment net book value of $2.3 billion included $1.7 billion of federal property and
$0.6 billion of other property.
When parts of an item of property and equipment have different estimated useful lives, they are accounted for as separate items
(major components) of property and equipment.
|
Vancouver Fraser Port Authority
24
Notes to the summary consolidated financial statements
2. Basis of presentation and significant accounting policies (Continued)
Depreciation commences when the asset is available for use and is recognized on a straight-line basis over the estimated useful
lives of each part of an item of property and equipment in the summary consolidated statement of comprehensive income. Land,
habitat bank assets, and construction-in-progress are not depreciated.
Estimating the appropriate useful lives of assets requires judgment and is generally based on estimates of life characteristics of
similar assets. The assets’ residual values, method of depreciation, and estimated useful lives are reviewed at minimum annually,
and adjusted on a prospective basis if appropriate.
An item of property and equipment is derecognized on disposal or when no future economic benefits are expected from its use.
Gains or losses on disposal or retirement of the property and equipment are determined by comparing the net disposal proceeds
with the carrying amount of the assets and are recognized in the summary consolidated statement of comprehensive income.
The ranges of estimated useful lives for each class of property and equipment are as follows:
Dredging 4 to 40 years
Berthing structures, buildings, roads and surfaces 10 to 75 years
Utilities 10 to 50 years
Machinery and equipment 3 to 25 years
Office furniture and equipment 3 to 10 years
Leasehold improvements and right-of-use assets Term of lease
i) Leases
Where the VFPA is a lessee, at the inception of a contract, the VFPA determines if it has the right to control the asset and
accordingly recognizes a right-of-use asset with a corresponding lease liability. The right-of-use asset is initially measured at cost,
which includes the initial lease liability, any lease payments made at or before commencement date less any lease incentives
received, any initial direct costs, and restoration costs. It is depreciated on a straight-line basis over the shorter of the lease term
and its estimated useful life. The lease liability is initially measured at the present value of the future unavoidable lease payments
under the contract, discounted using the interest rate implicit in the lease contract. Where the implicit rate cannot be readily
determined, the VFPA uses the incremental borrowing rate of the legal entity entering into the lease contract. Subsequently, the
lease liability is measured at amortized cost, using the effective interest method. Transaction costs related to the leases are
classified as deferred charges and are amortized over the lease term. If the lease is less than 12 months or has a lower dollar
value, the lease is expensed on a straight-line basis over the lease term.
Where the VFPA is a lessor, on initial identification of a lease contract, the VFPA determines whether the contract is a finance
lease or an operating lease. A lease is classified as a financing lease if substantially all of the risks and rewards of owning the
asset are transferred to the customer; otherwise, it is classified as an operating lease. Lease payments received by the VFPA
under operating leases are recognized as lease revenue within rental revenue on a straight-line basis over the lease term.
Where the VFPA is an intermediate lessor, it accounts for its interest in the head lease and the sublease separately. If the
sublease is classified as a finance lease, the right-of-use asset relating to the head lease is derecognized and a finance lease
receivable in the sublease is recognized.
j) Impairment of non-financial assets
At the end of each year, the VFPA reviews the carrying amount of its non-financial assets including property and equipment and
intangible assets to determine whether there is any indication of impairment. When an indication of impairment exists, the
recoverable amount of the non-financial asset is estimated. For the purposes of assessing impairment, non-financial assets are
grouped at the smallest group of assets that generate cash inflows from continuing use that are largely independent of the cash
inflows of other assets or cash generating units (CGU).
The recoverable amount of an asset or CGU is the higher of its fair value less costs to sell and its value in use. Value in use is
based on the estimated future cash flows, discounted to their present value using a discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset or CGU.
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses
are recognized in net income.
25
Financial report 2022
|
2. Basis of presentation and significant accounting policies (Continued)
k) Provisions
Provisions include those for environmental restoration, leased site restoration, local channel dredging contributions, and legal
claims. A provision is recognized when the VFPA has a present legal or constructive obligation as a result of a past event, it is
probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a rate that
reflects current market assessments of the time value of money and the risks specific to the liability. Changes in the provision are
recognized within other operating and administrative expenses in the summary consolidated statement of comprehensive income and
the unwinding of the discount is recognized within finance costs in the summary consolidated statement of comprehensive income.
l) Payments in lieu of taxes
Payments in lieu of taxes (PILT) are estimated by the VFPA in accordance with the Payments in Lieu of Taxes Act. Accruals are
re-evaluated each year and changes, if any, are made in the current period’s summary consolidated financial statements based
on the best available information, including the results, if any, of appraisals by an independent consulting firm. PILT are paid on
all unoccupied land and all submerged lands in the Burrard Inlet, Fraser River, and Roberts Bank, except for Indian Arm and the
navigation channels.
m)
Employee future benefits
The VFPA maintains defined contribution, defined benefit, and other benefit plans for its employees. The VFPA’s contributions
to the defined contribution pension plans are expensed as the related services are provided. The VFPA also maintains other
non-funded benefits for eligible employees. The VFPA accrues in its accounts annually the estimated liabilities for severance pay,
annual leave, and overtime compensatory leave, which are payable to its employees in subsequent years.
For the defined benefit pension plans, the asset or liability recognized in the summary consolidated statement of financial position
in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the year less the
fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit
credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows
using interest rates at the end of each year on high-quality corporate bonds that are denominated in the currency in which the
benefits will be paid and that have terms to maturity approximating to the terms of the related pension obligation. The measurement
date for the defined benefit pension plans is December 31.
Actuarial gains or losses arising from experience adjustments and changes in actuarial assumptions are recognized in other
comprehensive income or loss.
Past service costs are recognized in net income immediately, unless the changes to the pension plans are conditional on the
employees remaining in service for a specified period of time (the vesting period). In this circumstance, the past service costs are
recognized in accumulated other comprehensive income and amortized on a straight-line basis over the vesting period in the
summary consolidated statement of comprehensive income.
n) Revenue recognition
The VFPA recognizes revenue when it transfers control over a promised good or service, a performance obligation under the
contract, to a customer and where the VFPA is entitled to consideration resulting from completion of the performance obligation.
Depending on the terms of the contract with the customer, revenue recognition can occur at a point in time or over time. When a
performance obligation is satisfied, revenue is measured at the transaction price that is allocated to that performance obligation.
i) Rental revenue
The VFPA leases property to customers, primarily for shipping terminals or other supply chain support services. Fixed lease
revenue is recognized on a straight-line basis over the term of the lease. Contingent based lease revenue is recognized
periodically, based on lessee’s cargo volumes, or other revenue as stipulated in the respective agreements. Cash received
in advance is deferred and recognized as revenue when the revenue recognition criteria are met.
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Vancouver Fraser Port Authority
26
Notes to the summary consolidated financial statements
2. Basis of presentation and significant accounting policies (Continued)
ii) Fee revenue
The VFPA provides port services to customers, primarily for access to the harbour and shipping terminals. Revenue for port
services is recognized at a point in time, based on a vessel’s arrival or departure.
iii) Other revenue
The VFPA provides various other customer services and earns interest on cash held in banks. This revenue is recognized in
the period the services are provided or the period in which interest is earned.
o) River dredgeate and dredging
Costs of removing river dredgeate to maintain navigable waterways to a standard of depth are expensed. However, costs of river
dredgeate removed from the waterway for maintenance, placed on the VFPA property, and which provides betterment to that
property, are capitalized. Effective January 1, 2022, the VFPA adopted amendment to International Accounting Standards (IAS)
16 – Property, Plant and Equipment. This standard requires the net proceeds from selling any items produced while bringing an
item of property, plant, and equipment to the condition necessary for it to be capable of operating in the manner intended by
management together with the cost of producing these items, to be recognized in profit and loss. The adoption of the amendments
did not have a significant impact on the summary consolidated financial statements.
Dredging costs that deepen navigable waterways to establish a new standard of depth for future economic benefit are capitalized.
Proceeds from the sale of river dredgeate derived from maintenance are recorded as revenue.
p) Federal stipend
Under the Act, the VFPA is obligated to pay annually to the federal minister of transport a charge to maintain its Letters Patent in
good standing. The charge is calculated by reference to gross revenue at rates on a sliding scale varying between 2% and 6%
depending on the gross amount.
q) Government grants and contributions
The VFPA recognizes government grants and contributions, including non-monetary grants at fair value, when there is reasonable
assurance that any conditions attached to them will be met and the grants will be received. Government grants and contributions
related to capital assets are deducted from the carrying amount of the related asset and recognized in net income over the estimated
useful life of the related asset as a reduced depreciation expense in the summary consolidated statement of comprehensive income.
r) Non-monetary transactions
Non-monetary transactions are measured at the fair value of the asset surrendered or the asset received, whichever can be more
reliably measured, unless the transaction lacks commercial substance or the fair value cannot be reliably established. The
commercial substance requirement is met when the future cash flows are expected to change significantly because of the
transaction. When the fair value of a non-monetary transaction cannot be accurately measured or the transaction lacks
commercial substance, it is recorded at the carrying amount of the asset given up adjusted by the fair value of any monetary
consideration received or given.
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Financial report 2022
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2. Basis of presentation and significant accounting policies (Continued)
s) Restatement of comparative figures
During the year, the VFPA retroactively restated its financial statements for the adoption of the IFRS Interpretation Committee agenda
decision on IAS 7 – Statement of cash flows and for presentation of borrowings as a result of a review of the existing revolving
credit facility agreements (together, the credit agreements). On the adoption of IFRIC decisions for IAS 7 –
Statement of cash flows
,
restricted cash that met the definition of demand deposits with restrictions arising from a third-party contract was reclassified to cash
and cash equivalents from accounts receivable and other assets and long-term receivables and other assets (December 31, 2022
– $10.9 million). With respect to the VFPA’s borrowings, the VFPA determined that under certain terms of the credit agreements the
lending financial institutions are obligated to renew any outstanding borrowing amounts up to the March 2026 maturity date of the
facilities at VFPA’s full discretion so long as the VFPA borrowings remain in compliance with terms of the credit agreements. As a
result, the borrowings have been retroactively restated from current liabilities to long-term liabilities and the summary consolidated
statement of cash flows has been restated to present proceeds on borrowing and repayments on a gross basis. The impact to the
VFPA’s opening summary consolidated statement of financial position (January 1, 2021) was a reclassification of $20 million from
current liabilities to long-term liabilities and $5.4 million from accounts receivable and other assets to cash and cash equivalents.
The financial impact from adoption of IFRIC decisions on IAS 7 – Statement of cash flows and clarification of the credit
agreements at December 31, 2021 is as follows:
Consolidated statements of financial position
Consolidated statements of cash flows
As previously
r
eported
A
djustment
A
s restated
Operating activities
Accounts receivable and other assets
$
(
5,741)
$
2
,227
$
(
3,514)
Investing activities
Net change on long-term receivables
6
45
2
20
8
65
Financing activities
Proceeds from issuance of short-term borrowings
9
4,955
(
94,955)
–
P
roceeds from long-term borrowings – 104,955 104,955
Repayment of long-term borrowings
–
(
10,000)
(
10,000)
Cash and cash equivalents – Beginning of year $ 64,192 $ 7,315 $ 71,507
Cash and cash equivalents – End of year
$
7
0,683
$
9
,762
$
8
0,445
As previously
r
eported
A
djustment
A
s restated
Assets:
Current assets
Cash and cash equivalents $ 70,683 $ 9,762 $ 80,445
Accounts receivable and other assets
6
3,502
(
7,618)
5
5,884
Long term assets
Long-term receivables and other assets
7
5,030
(
2,144)
7
2,886
Liabilities
Current liabilities
Borrowings 115,743 (114,942) 801
Non-current liabilities
Borrowings – 114,942 114,942
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Vancouver Fraser Port Authority
28
Notes to the summary consolidated financial statements
3. Critical accounting judgments and estimates
The preparation of the VFPA’s summary consolidated financial statements requires management to make judgments in the
application of accounting policies, and estimates and assumptions that affect the reported amounts of assets, liabilities, income
and expenses, as well as the disclosure of contingent assets and liabilities at the date of the summary consolidated financial
statements. Actual results may differ from those judgments, estimates, and assumptions.
Estimates and assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized in the period in which the
estimates are revised and in any future periods affected. The estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:
a) Property and equipment and intangible assets
The VFPA makes judgments as to whether certain costs are directly attributable to property and equipment and intangible
assets warrant capitalization. The VFPA also makes judgments in terms of assessing whether a capital project is more likely than
not to proceed, such as Roberts Bank Terminal 2. This can include assessments with respect to required approvals and permits.
The Roberts Bank Terminal 2 project is currently awaiting a decision on a federal environmental assessment approval, which is
expected to be made during the next financial year. Additional approvals and permits will also be required to advance the project.
Management has made the assessment that it is more likely than not to receive these approvals and permits.
If the required approvals and permits are not obtained, a decrease in the carrying value of the VFPA’s property and equipment
could range up to 13%.
The VFPA assesses whether there are any indications that items of property and equipment and intangible assets may be
impaired. If indications of impairment exist, the recoverable amount calculations require the use of estimates including, but not
limited to, discount rates and future cash flows.
The VFPA also estimates the useful lives of its assets and residual values, which will impact the amount of depreciation or
amortization recorded in the period.
b) Employee future benefits
The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a
number of assumptions. The assumptions used in determining the net cost (income) for pensions include discount rate, inflation
rate, salary growth rate, mortality rate, and medical cost trend rate. Any changes in these assumptions will impact the carrying
amount of pension obligations. The VFPA determines the appropriate discount rate at the end of each year. In determining the
appropriate discount rate, the VFPA considers the interest rates of high-quality corporate bonds that are denominated in the
currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension obligation.
Other key assumptions for pension obligations are based in part on current market conditions.
c) Environmental liabilities
The VFPA has contingent liabilities and provisions for environmental restoration requirements at a number of its properties.
The nature, extent, timing, and cost of clean-up of these properties are based on management’s best estimates, with input from
third-party specialists, where applicable. Provisions recognized in the VFPA’s summary consolidated statement of financial
position are discounted using an appropriate risk-free rate.
The VFPA’s environmental staff keeps track of contaminated or possibly contaminated properties during the year and are part
of the team conducting due diligence on all property acquisitions. At the end of each year, each property is assessed for possible
environmental provisions in accordance with IAS 37 – Provisions, contingent liabilities and contingent assets. The provision does
not include restoration costs on leased properties where tenants are obligated to incur the costs and have sufficient financial
capacity to fulfill their lease obligations. Uncertainty exists over actual environmental restoration costs to be incurred due to the
estimates involved in performing the assessment.
29
Financial report 2022
|
4. Borrowings
2022 2021
(Restated –
note 2(s))
Revolving credit facilities $ 199,656 $ 114 , 942
Demand loan 701 801
200,357 115 ,74 3
Less: Current portion (701) (801)
$ 199,656 $ 114 , 942
a) Revolving credit facilities
The VFPA has available three revolving credit facilities totalling $800 million (2021 – $800 million) with the Toronto-Dominion
Bank, Royal Bank of Canada, and Canadian Imperial Bank of Commerce that may be drawn in either Canadian or United States
dollars. The revolving credit facilities are unsecured and bear interest at the banks’ prime rate less a spread or bankers’
acceptance rates and have a five-year term expiring in March 2026. The VFPA pays average fees of 0.39% per annum on
bankers’ acceptances and letters of credit issued and average standby fees of 0.10% per annum on the unused, authorized
portion of the facility. Outstanding amounts may be repaid at any time without penalty and can be renewed at the VFPA’s
discretion up to the facility maturity as long as the VFPA is in compliant with terms of the credit agreements. As at
December 31, 2022, the VFPA had a total of $200 million (2021 – $115 million) drawn against the revolving credit facilities
by way of short-term bankers’ acceptances.
As at December 31, 2022, the VFPA has a total of $11.3 million (2021 – $10.4 million) in letters of credit outstanding.
b) Demand loan
PoVT has an unsecured demand loan outstanding for $0.7 million with the Toronto-Dominion Bank that bears interest at the
Canadian prime rate less 0.85% per annum. Minimum quarterly principal repayments of $25,000 are required, and amounts
outstanding may be repaid at any time without penalty and must be fully repaid by March 2026.
5. Commitments
As at December 31, 2022, the VFPA has operating commitments of $23.8 million (2021 – $17.5 million) and capital commitments
of $169.3 million (2021 – $239.8 million).
6. Contingent liabilities
The VFPA has entered into several long-term agreements with arm’s length parties that require future payments to be made when
certain events have occurred. The VFPA also has monetary disputes with arm’s length parties in the ordinary course of its operations.
The estimated future payments that can be reasonably estimated are approximately $35.7 million and will be accrued as liabilities in
the summary consolidated financial statements if certain events occur in the future.
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Vancouver Fraser Port Authority
30
Notes to the summary consolidated financial statements
7. Gateway Infrastructure Program
The Gateway Infrastructure Program (GIP) is a $717 million investment in supply-chain improvements for 17 projects beyond
traditional port activities and lands, where the majority of the projects were substantially completed in 2018. Funding for the projects
was provided by the federal and provincial governments, other partners and the VFPA and industry for the areas noted below. The
VFPA and industry contributed $167 million towards the project funding, of which a Gateway Infrastructure Fee was implemented
on January 1, 2011 in order to recover 90% of the funding. The fees collected and expenditures made towards these projects has
been summarized below.
a) VFPA and industry funding details
Industry-
T
otal VFPA
f
unded
V
FPA
and industry portion portion
c
ontributions
(
90%)
(
10%)
North Shore trade area
$
5
9,000
$
5
3,100
$
5
,900
South Shore trade area
5
8,000
5
2,200
5
,800
Roberts Bank rail corridor
5
0,000
4
5,000
5
,000
$ 167,000 $ 150,300 $ 16,700
b) Gateway Infrastructure Fee collected and total project expenditures
Current year Total to date
North Shore South Shore
Roberts Bank
North Shore
South Shore
Roberts Bank
trade area trade area rail corridor Total trade area trade area rail corridor Total
Gateway infrastructure
fee (revenue)
$
3
,850
$
2
,487
$
1
,767
$
8
,104
$
3
2,068
$
3
6,627
$
2
5,870
$
9
4,565
Gateway infrastructure
program (expenditures)
–
–
–
–
3
6,654
5
5,601
4
0,822
1
33,077
Less: industry funded
portion (90%) – – – – (32,989) (50,041) (36,740) (119,770)
VFPA portion (10%)
$
–
$
–
$
–
$
–
$
3
,665
$
5
,560
$
4
,082
$
1
3,307
31
Financial report 2022
|
Appendix: Port authority compensation disclosure 2022
Director and corporate governance
Governance
The governing directors of the Vancouver Fraser Port Authority are appointed by the following four bodies:
· Federal government appoints eight members, seven of whom are recommended by port users
· Province of British Columbia appoints one member
· Prairie provinces Alberta, Saskatchewan, and Manitoba collectively appoint one member
· Sixteen municipalities that border the port authority’s jurisdiction collectively appoint one member
Once appointed to the board, members have a fiduciary obligation to represent the best interests of the port authority. The 11 members
of the board of directors offer a broad range of experience and expertise.
Board members are appointed for terms of up to three years and are eligible for reappointment, but cannot serve more than nine
consecutive years on the board.
The board of directors meets six times per year, usually for one full day. Members also attend a two-day retreat to discuss strategic issues.
Mandate of the board of directors
The board’s role is one of governance and oversight of the port authority. The board operates by delegating to management certain authorities,
such as spending, and by reserving certain powers for itself. The board’s governance role involves reviewing and approving the port authority’s:
· Corporate vision, mission, values, and goals
· Strategic planning process and direction
· Land use plan
· Business and annual operating and capital plans
· Goals and objectives for corporate performance
· Material risks
The board also reviews and approves:
· A board succession planning process
· The hiring, compensation, and planning succession of the president and CEO
Ethics and diversity
The code of conduct for directors and officers of the port authority establishes clear rules regarding conflicts of interest, inside
information, outside employment, and more, and board members must disclose any potential or real conflicts of interest.
The nominating committee, which recommends candidates for seven of the board positions, has adopted a policy where they endeavour
to achieve gender parity and to reflect Canada’s diversity.
Board members’ biographies
The following biographies are for board members as of May 17, 2022:
Judy Rogers
Judy has been a board member and served as chair of several provincial Crown corporations and not-for-profit organizations. She held
the role of city manager of the City of Vancouver from 1999 to 2008.
Chair of the board: Attended six of six meetings in 2022, plus all the committee meetings
Tenure: Since December 14, 2017
Appointed by the federal government on the recommendation of the nominating committee
Appendix: Port authority compensation disclosure 2022
|
Vancouver Fraser Port Authority
32
James Belsheim
James is the former president of Neptune Bulk Terminals Canada Ltd. and held senior positions in the B.C. forest industry. He holds or
has held several chair roles in the non-profit and industry sectors, including the United Way of Lower Mainland, the Marine Transportation
Advisory Council, and the BC Chamber of Commerce.
Member of the board: Attended six of six board meetings in 2022, plus committee meetings, as required
Member of the governance and external relations committee
Member of the human resources, compensation and safety committee
Tenure: Since December 11, 2020
Appointed by the federal government on the recommendation of the nominating committee
Bruce Chan
Bruce serves on several boards and spent nearly 20 years in a variety of senior positions with international marine transportation firm
Teekay Corporation. Prior to that, he was with Ernst & Young, LLC in Vancouver.
Member of the board: Attended six of six meetings in 2022, plus committee meetings, as required
Chair of the audit and risk management committee
Member of the governance and external relations committee
Tenure: Since May 14, 2019
Appointed by the federal government on the recommendation of the nominating committee
Mike Corrigan
Mike is the chief executive officer of Interferry Inc., a global trade association representing the worldwide ferry industry. He was the chief
executive officer and chief operating officer of BC Ferries and held various senior management roles at Westcoast Energy.
Member of the board: Attended six of six meetings in 2022, plus committee meetings, as required
Chair of the major capital projects committee
Member of the audit and risk management committee
Tenure: Since June 29, 2018
Appointed by the federal government on the recommendation of the nominating committee
Ken Georgetti
Ken is the principal at Montrose Consulting and has over 30 years of legislative and policy experience in labour relations and government
policy. He is president emeritus of the Canadian Labour Congress and former president of the BC Federation of Labour.
Member of the board: Attended six of six meetings in 2022, plus committee meetings, as required
Member of the major capital projects committee
Member of the human resources, compensation and safety committee
Tenure: Since May 18, 2019
Appointed by the province of British Columbia
Chief Clarence Louie
Clarence is the chief of the Osoyoos Indian Band, and chief executive officer of the Osoyoos Indian Band Development Corporation, which has
become a multi-faceted corporation that owns and manages 13 businesses and six joint ventures and employs 500 people.
Member of the board: Attended six of six meetings in 2022, plus committee meetings, as required
Member of the major capital projects committee
Member of the governance and external relations committee
Tenure: Since March 25, 2019
Appointed by the federal government on the recommendation of the nominating committee
Appendix: Port authority compensation disclosure 2022
33
Financial report 2022
|
Catherine McLay
Catherine is a former chief financial officer and executive vice president, finance and corporate services, with TransLink. She worked in
the forest sector in several senior executive roles at Canfor and Howe Sound Pulp and Paper and is or has been a member of several
health, non-profit, and corporate boards.
Member of the board: Attended six of six meetings in 2022, plus committee meetings, as required
Chair of the human resources, compensation and safety committee
Member of the audit and risk management committee
Tenure: Since June 17, 2017
Appointed by the federal government on the recommendation of the nominating committee
Joanne McLeod
Joanne is a former financial executive with Westcoast Energy Inc. and worked in corporate banking for the Canadian Imperial Bank
of Commerce in the energy, regulated businesses, and government sectors. She has served on several non-profit, financial institution,
and other boards.
Vice chair of the board: Attended six of six meetings in 2022, plus committee meetings, as required
Member of the audit and risk management committee
Member of the governance and external relations committee
Tenure: Since December 20, 2017
Appointed by the federal government on the recommendation of the nominating committee
Craig Munroe
Craig is a partner at Pulver Crawford Munroe LLP and has been practising law for 20 years, advising companies in the resource,
transportation, marine, construction, and retail industries. He has served at the executive level in several organizations and been
a member of several boards.
Member of the board: Attended six of six meetings in 2022, plus committee meetings, as required
Member of the major capital projects committee
Member of the human resources, compensation and safety committee
Tenure: Since November 9, 2017
Appointed by the federal government
Darrell Mussatto
Darrell served as mayor of the City of North Vancouver for 13 years from 2005 until 2018 and was a city councillor for 12 years prior
to that. He contributed to the TransLink Mayors’ Plan, was a director on the E-COMM 911 board, and chair of the Metro Vancouver
Utilities Committee.
Member of the board: Attended six of six meetings in 2022, plus committee meetings, as required
Chair of the governance and external relations committee
Member of the human resources, compensation and safety committee
Tenure: Since June 1, 2020
Appointed by the 16 municipalities adjacent to the port authority’s jurisdiction
Brant Randles
Brant was the president and director of Louis Dreyfus Company (LDC) Canada ULC, a leading global merchant and processor of
agricultural goods. He has been an executive member of the Western Grain Elevator Association.
Member of the board: Attended five of six meetings in 2022, plus committee meetings, as required
Member of the major capital projects committee
Member of the audit and risk management committee
Tenure: Since March 1, 2021
Appointed by the provinces of Alberta, Saskatchewan, and Manitoba
For the full biographies of each board member, see our website.
|
Vancouver Fraser Port Authority
34
Continuing development
The governance and external relations committee oversees board director development. Opportunities for development include presentations
by senior executives about emerging issues and topics relevant to our business, operations, and the regulatory environment, as well as
information packages developed to enhance the directors’ understanding of a particular subject matter. External experts are also invited
from time to time to speak at committee meetings on various topics.
In typical years, the board organizes site visits for directors to gain additional insights into various aspects of port business and global
operations. Directors are also encouraged to participate in external professional development programs, both related to the specifics of
the port and supply-chain environment and more generally related to governance and areas linked to our overall strategic focus.
Committee chairs may also coordinate education sessions on specific topics for their committee members.
Board committee overview
Committees of the board meet at least six times per year.
The audit and risk management committee assists the board of directors in fulfilling its obligations and oversight responsibilities
relating to financial planning, financial aspects of employee pension plans, the audit process, the special examination process, financial
reporting, the system of corporate controls, and risk management.
The human resources, compensation and safety committee assists with all matters relating to human resources, including but not
limited to, chief executive officer evaluation and compensation, management development, succession planning, compensation philosophy,
significant human resources policies, employee pension plan structure issues, and the health and safety program for the organization.
The major capital projects committee assists with matters relating to major capital projects, including providing strategic direction
and guidance.
The governance and external relations committee develops and recommends corporate governance principles; makes
recommendations regarding the size, composition, and charters of board committees; assists with the annual board evaluation process;
develops and recommends the board of director profile, recruitment profile, and succession plan; and administers the board code of
conduct. The committee also provides oversight and guidance with respect to the port authority’s relationships with key Indigenous
groups and stakeholders, including government, special interest groups, tenants, and other customers, in areas with the greatest impact.
Committee members
As of December 31, 2022, the board composition was as follows:
Appendix: Port authority compensation disclosure 2022
Governance and
external relations
committee
Major capital
projects
committee
Human resources,
compensation and
safety committee
Audit and risk
management
committee
Name
Board
Judy Rogers
James Belsheim
Bruce Chan
Mike Corrigan
Ken Georgetti
Chief Clarence Louie
Catherine McLay
Joanne McLeod
Craig Munroe
Darrell Mussatto
Brant Randles
C
M
M
M
M
M
M
VC
M
M
M
C
M
M
M
M
M
M
C
M
M
M
M
M
M
C
C
M
M
M
M
Legend: C: chair, VC: vice chair, M: member
35
Financial report 2022
|
Director compensation
In ‘000s of Canadian dollars
Compensation review
Consistent with the executive compensation review completed in early 2021, the governance and external relations committee
completed a director compensation review in early 2022. Prior to this review, the most recent comprehensive director compensation
review occurred in 2015. The board considers director compensation on an annual basis and, from time to time, retains an external
consultant to conduct a compensation review. The next review is expected to occur in 2024.
The 2022 director compensation review followed a similar approach to the 2021 executive compensation review. Director compensation
was benchmarked relative to a public sector peer group and a private sector peer group; this set of comparables was similar to the set
used for the purposes of the executive compensation review (see comparator companies on page 39), with a focus on the port authority’s
closest peers. Ultimately, the board decided that a weighting of 80% public sector/20% private sector reflected the talent pool for the
directors. Compared to the weighting applied to executive pay, this weighting reflects the talent pool as more provincial or national,
rather than national and international for executives, and less aligned to publicly traded organizations compared to executives.
Due to a delay in the completion of the review as a result of other strategic and COVID-related priorities, the adjustments were approved
and paid in 2022 and were retroactive to January 1, 2021.
Letter from the chair of the board
Dear stakeholders,
2022 key highlights
In 2022, strong global demand for Canadian resources supported trade through the Port of Vancouver, Canada’s largest port, despite
trade impacts from ongoing and complex supply-chain challenges and the poor 2021 Canadian grain harvest. Within these challenging
dynamics, the Vancouver Fraser Port Authority continued to deliver on its strategic agenda thanks to the dedication of its employees,
most of whom returned to partial in-office work in 2022 after working remotely for two years due to the COVID-19 pandemic, and
thanks to the resourcefulness and hard work of the entire port community, who kept cargo flowing for Canada and Canadians through
another difficult year.
Judy Rogers
James Belsheim
Bruce Chan
Mike Corrigan
Ken Georgetti
Chief Clarence Louie
Catherine McLay
Joanne McLeod
Craig Munroe
Darrell Mussatto
Brant Randles
Total
180
45
53
53
45
45
53
70
45
53
45
687
–
50
46
60
48
54
49
50
55
52
60
524
180
95
99
113
93
99
102
120
100
105
105
1,211
Total
Other fees
Annual retainer
1
Name
1
Excludes 2021 retainer adjustments
|
Vancouver Fraser Port Authority
36
One of the port’s foundational strengths—the most diversified cargo-handling abilities of any port in North America—continued to provide
resilience in trade flows despite the year’s headwinds. A strong fourth-quarter grain rebound, the second-highest annual container and
potash volumes to date, and record coal volumes helped offset grain-sector declines through mid-year, resulting in 141 million metric
tonnes handled through the port overall, a 3% decrease from 2021. After a two-year hiatus due to pandemic restrictions, in April 2022,
Vancouver’s port community and tourism partners welcomed the restart of cruising in Canada for what proved to be a strong comeback
season at the Port of Vancouver, including a record 307 cruise ship visits, a 6% increase compared to 2019. The port authority and
Vancouver cruise stakeholders played a leading role in the national discussions on ensuring a safe resumption of cruise business in Canada.
The return of cruise revenues helped drive an 11.1% increase in overall revenues and a 10.5% increase in EBITDA, helping enable the
port authority’s $233 million in capital investments in 2022, centrally infrastructure and trade-enabling land, up from $208 million
invested in 2021. Despite the challenging trade landscape in both 2021 and 2022, the port authority’s capital investment in both years
was an increase over the port authority’s 10-year historical average of annual investment, as it leads projects to enhance the port’s trade
capacity and supply-chain resilience, for the benefit of Canadians across the country.
Through 2022, significant progress was made on the nearly $1 billion of infrastructure projects under development that the port authority
is advancing in partnership with government and industry to meet demand for growing trade, enhance supply-chain resilience, and deliver
on our federal mandate to enable Canada’s trade objectives through the port. Major 2022 milestones included completion of construction
on the Centerm Expansion Project, which is designed to optimize land use and deliver 60% more trade capacity through a 15%
expansion in terminal footprint plus terminal reconfiguration, as well as completion of the Commissioner Street Road and Rail Alignment
Project, which is the second National Trade Corridors Fund-supported project in the Vancouver gateway to achieve completion, following
completion of the Mountain Highway Underpass Project in 2021.
With Canada’s west coast ports projected to run out of container capacity by the mid- to late-2020s, in 2022, the port authority continued
to advance the Roberts Bank Terminal 2 Project, a proposed new container terminal in Delta, through the final stages of the federal
environmental assessment process. The project is Canada’s opportunity to provide timely capacity for our country’s growing trade needs,
support the success of Canada’s Indo-Pacific Strategy to expand trade with a region on track to account for 50% of the world’s GDP by
2040, and strengthen reliable access to goods Canadians use every day.
In March 2022, the Impact Assessment Agency of Canada (IAAC) concluded a public comment period on our information request
response and on the draft conditions for the project. The port authority provided a final submission to IAAC to show how topics raised
during the public comment period—such as project need, benefits, and enhanced mitigation measures to protect key species—will be
addressed. Through the year, the port authority continued to build positive, long-lasting relationships with Indigenous groups to ensure the
project is guided by Indigenous knowledge, relationships, and environmental and cultural stewardship.
In April 2023, the port authority welcomed the Government of Canada’s approval of the project, following a rigorous environmental
assessment process that started in 2013. With this landmark project milestone achieved, the port authority will now work toward
obtaining other applicable approvals and permits to advance the project and support a strong trade future for Canada and Canadians.
Alongside its work to unlock trade capacity and enhance supply-chain resilience, in 2022 the port authority continued to advance a suite
of environmental programs at the port to protect and enhance the environment around the port. The port authority is also working
towards a goal of a reduction in carbon emissions from its own activities of 40% by 2030 and to zero port-related carbon emissions
by 2050, aligned with Canada’s targets. The port authority worked towards achieving its internal target for 2030 in 2022 with the
commissioning of new energy-efficient boilers in Canada Place. Aligned with the longer-term goals, the port authority was pleased to
partner with the Province of British Columbia and several port stakeholders to fund the testing of low-emission fuels and technologies
across the port through the Low-Emission Technology Initiative.
From a biodiversity perspective, the collaborative, world-leading Enhancing Cetacean Habitat and Observation (ECHO) Program led by the
port authority coordinated underwater noise reduction measures across the largest geographical areas to date: 80 nautical miles of the
Salish Sea, covering nearly 50% of all southern resident killer whale critical habitat that overlaps with shipping lanes. In addition, in 2022,
a record-breaking 86% of all large commercial ships participated in program measures to support quieter seas and healthier whales.
The following compensation discussion and analysis outlines the board and port authority’s pay-for-performance philosophy and
compensation programs.
Sincerely,
Judy Rogers
Chair of the board
Appendix: Port authority compensation disclosure 2022
37
Financial report 2022
|
Compensation discussion and analysis
The following compensation discussion and analysis outlines information on the Vancouver Fraser Port Authority’s executive compensation
philosophy, applicable processes used in determining compensation, and actual compensation paid to the following top executive officers
(as of December 31, 2022):
· Robin Silvester, president and chief executive officer (CEO)
· Victor Pang, chief financial officer (CFO)
· Peter Xotta, vice president, operations and supply chain
· Cliff Stewart, vice president, infrastructure
· Duncan Wilson, vice president, environment and external affairs
Compensation oversight, governance, and risk management
Committee overview
The board and the human resources, compensation and safety committee have oversight of the executive compensation philosophy,
the overall compensation provisions for the senior leadership team, the specific compensation recommendations for the president and
CEO, and associated risks. The committee also reviews and approves the port authority’s incentive plans and related performance
metrics with input from the major capital projects committee.
In conducting its mandate, in 2022 the human resources, compensation and safety committee met eight times and each meeting
included an in camera session.
External independent advisor
As part of its regular review of the executive compensation program, the committee uses outside compensation experts as a resource
when necessary. Since 2018, the committee has engaged Hugessen Consulting as an independent compensation advisor to the board
and to support the board in a review of its approach to board and executive compensation. Hugessen Consulting provides no other
services to the port authority.
In 2021, the committee, with support from its advisor Hugessen Consulting, reviewed, in normal course, the executive compensation
philosophy, pay levels, and incentive programs. In 2022, the committee required only limited support from Hugessen Consulting, as the
executive and director compensation reviews are conducted on a three-year cycle, with the next review planned for 2024.
Compensation review
In March 2021, the board reaffirmed compensation for the port authority’s executives, as presented below.
In developing and assessing the compensation philosophy for the port authority, the board considers the role of the port authority and
the Port of Vancouver in the larger Canadian trade agenda.
The Port of Vancouver is by far the largest in Canada (roughly the size of the next five largest ports in Canada combined) and one of
the top 30 ports worldwide by tonnage of cargo handled, enabling annual trade of more than $275 billion in goods with more than
170 trading economies and generating more than 115,000 supply-chain-related jobs.
The port is a major enabler of Canada’s trade, which is key to Canada’s economic development by connecting Canada to global
trade markets.
At arm’s length to the federal government, the port authority is financially self-sufficient and governed by a board with input to the
appointing entities provided by key stakeholders:
· The port authority is responsible for purchasing, creating, managing, and leasing the federal lands that make up the Port of Vancouver
to independent terminal operators who handle trade through the port, and by providing marine, road, and other infrastructure to
support
port growth and function
· The port authority operates in a commercial market environment like private sector port stakeholders and users (transportation
companies, terminal operators, commodity producers), suppliers (railroads, land transportation companies) and competitors (other
North American ports)
|
Vancouver Fraser Port Authority
38
· The port authority is a major real estate developer and owner, managing the largest industrial land portfolio in the Lower Mainland of
B.C. and securing new land necessary to support Canada’s trade objectives in a highly limited and competitive real estate market
· Since its amalgamation in 2008 the port authority’s execution of its federal mandate—as set out by the Canada Marine Act—and capital
investments have contributed to international trade growth of approximately 40%, well above the growth rate of the Canadian economy
In this context, the board also considers the port authority to have operating and governance aspects that are typical of both a large public
sector Crown corporation as well as a large Canadian private sector company. The board also considers the major responsibilities of
management to include:
Indigenous and stakeholder engagement: The port authority engages with many Indigenous groups and a wide range of stakeholders,
including 16 municipalities that border the Port of Vancouver, and many others with key economic ties to the port, provincial governments
(B.C., Prairies), national regulatory bodies, transportation companies, port tenants, and other Canadian and international private companies.
Competing interests of the various stakeholders are dynamic, and monitoring and balancing these interests are key to the port’s success.
Trade enabler and economic driver: The port authority must be cognizant of international commercial trends and demand to fulfill
its mandate to enable Canada’s trade through the Port of Vancouver. This includes proactively sustaining the supply chain of the port
through land management, supply-chain capacity analysis, and strategic project developments. This role also involves interacting with
multiple levels of government, as well as Canadian and global businesses.
Infrastructure development: The port authority is undertaking and leading significant infrastructure development projects, both on and
off port lands, to support trade growth. These projects require complex collaboration and negotiation with a broad range of government,
industry stakeholders, and Indigenous groups. In recent years, more than half of the $1 billion in planned project investments has been
invested in trade-enabling infrastructure, excluding the Roberts Bank Terminal 2 Project estimated at $3 billion.
Development of digital infrastructure and gateway data utility: The port authority is leading the development of data and digitization
initiatives to improve data exchange between supply-chain partners, with the goal of providing enhanced operational visibility and supply-
chain reliability, as well as the optimization of trade network capacity. These initiatives will also give gateway stakeholders an aggregate
view of operations, enabling fact-based decision-making for medium-term operations planning and long-term infrastructure development
in the gateway. The supply-chain visibility platform (SCVP) is the first step in this development, with the creation of a data management
system that will aggregate data for all goods movement and provide a single platform for new applications focused on optimizing
supply-chain operations at the Port of Vancouver. The Active Vessel Traffic Management (AVTM) Program is the first optimization tool
in this system. It provides better use of anchor management and visibility, and planning for vessel movements in the gateway.
Facilities management: The port authority must actively set policy and manage certain common-use operations, including marine
operations, common roadways, and safety and security of the port. This work ensures the smooth flow of cargo in and out of the port and
the prevention of incidents. It also enables the direct, indirect, and induced employment—supported by ongoing operations at and related
to the Port of Vancouver—of more than 115,000 jobs.
Indigenous consultation: The port authority is responsible for federal Indigenous consultation on project development, requiring
ongoing interaction and relationship-building with more than 35 First Nations.
Environmental protection: The port authority has the federal responsibility for tenant project and environmental reviews, compliance
monitoring, and delivering a range of environmental programs, which often require significant collaboration or involve challenging
circumstances, such as public opposition.
Executive compensation philosophy
In 2021, the board approved the current version of the executive compensation philosophy for the port authority, which seeks to align
individual executive performance with the port authority’s long-term business strategy and supports the achievement of the following
objectives:
· Maximize performance in accomplishing the port authority’s annual business plan
· Attract, motivate, and retain executives with the skills and experience necessary to achieve the port authority’s business plan and
longer-term business strategies
Appendix: Port authority compensation disclosure 2022
39
Financial report 2022
|
The board considers a broad market for executive talent to reflect the skills and experience required to execute on the strategic plan
and effectively operate the port authority, including an understanding of international affairs and global economics, environmental and
sustainability management, legal and regulatory management, public accountability, and infrastructure development, as well as
stakeholder, government, and Indigenous engagement and consultation. The port authority seeks executive talent both nationally and
internationally to ensure candidates have the required skills and experience. The executive compensation philosophy is now weighted
towards variable and at-risk pay based on a combination of individual performance and the port authority’s corporate performance,
measured through the executive annual short-term and medium-term incentive plan programs.
Comparator companies
The board reviewed and selected the comparator peer organizations with input from the independent compensation advisor. The
comparator group is comprised of organizations similar to the port authority and/or with which the port authority competes for executives
in the market, including port and airport authorities, terminal operators and stevedoring companies, engineering and construction firms,
Crown corporations, and organizations engaged in real estate development and management.
There are few direct comparators to the port authority, owing to the size and complexity of the Port of Vancouver and the talent market
of executives, so the board identified, reviewed, and approved a public sector peer group and a private sector peer group as follows:
Public sector peer group: Includes 15 companies representing a range of commercial public sector organizations focusing on large
and nationally/provincially relevant federal agencies, trade-enabling/economic-driver organizations, other Crown corporations competing
for talent with the private sector, U.S. port authorities, and organizations with complex stakeholder engagement requirements, where pay
data is publicly available.
Private sector peer group: Includes 17 companies representing a range of Canadian publicly traded companies of comparable size in
the transportation, real estate, construction, utilities, and railroad sectors, with which the port authority is competing for talent.
Greater Toronto Airports Authority (authority)
Vancouver Airport Authority (authority)
Port of Los Angeles (authority)
Port of Seattle (authority)
Georgia Ports Authority (authority)
Port of Long Beach (authority)
Port Authority of New York and New Jersey (authority)
BC Hydro (provincial Crown)
Hydro-Québec (provincial Crown)
Ontario Power Generation (provincial Crown)
Enmax (municipal Crown)
EPCOR (municipal Crown)
Bank of Canada (federal Crown)
Canada Mortgage and Housing Corporation (federal Crown)
NAV Canada (federal Crown)
Cargojet (transportation)
Chorus Aviation (transportation)
Logistec (transportation)
CN* (transportation)
CP* (transportation)
Granite REIT (real estate)
Summit Industrial REIT (real estate)
WPT Industrial REIT (real estate)
Stantec (construction)
Badger Daylighting (construction)
Aecon Group (construction)
Bird Construction (construction)
TransAlta (energy)
Capital Power (energy)
Boralex (energy)
Superior Plus (energy)
Pembina* (energy)
Private sectorPublic sector
*For these organizations, given their size, the president and CEO and executives are compared to their equivalent one level lower in the corresponding organization
(e.g., port authority’s president and CEO is compared to a CEO direct report at CN)
|
Vancouver Fraser Port Authority
40
Pay positioning
To reflect the nature of the port authority, the board approved a weighted target total compensation pay position consisting of two-thirds
public sector peer group compensation median and one-third private sector peer group compensation median. This pay position was
further validated with a check on the relative position of port authority executive pay compared to the public sector peer group. Aiming for
pay positioning at the market median of the weighted comparator groups (public and private), the executive pay position is also between
the median and 75% of the public sector group, which recognizes the relative size and complexity of the port, among other factors.
While total executive compensation is targeted at median of the weighted comparator groups, the annual short-term incentive plan and
medium-term incentive plan provide the opportunity for executives to realize compensation above and below median commensurate with
port authority and individual performance.
The board reviewed the total compensation paid by the comparator organizations to positions comparable to those at the port authority
and analyzed the findings. With this information, in combination with role-specific information relative to the market, the board reaffirmed
the target total compensation for each executive position, which includes a mix of base salary, incentive compensation, and benefits.
Overview of key elements of compensation
The port authority executive compensation program consists of the following elements:
· Base salary
· Short-term incentive plan: Annual cash-based performance-based compensation
· Medium-term incentive plan: Three-year cash-based performance-based compensation
· Pension benefits and other perquisites
In 2019, the committee revised the incentive structure, reviewing the mix of compensation to increase weight on performance-based
compensation and reduce overall weight of guaranteed compensation (e.g., base salary, pension, and other benefits).
Base salary
Base salaries are determined according to the executive’s overall responsibilities, experience, and individual performance, and are
reviewed annually by the committee.
Short-term incentive plan
Through the short-term incentive plan, executives are eligible to earn an annual cash incentive based on corporate and individual
performance. Executives have a predetermined target value (see the following chart) and actuals may fluctuate above or below the
target based on at-risk performance against objectives.
The executive short-term incentive plan is aligned with the port authority’s strategy and business plan. Individual incentive payments
are determined through a combination of individual performance and corporate performance objectives measured through the corporate
scorecard and annual performance goals and reviewed on an annual basis.
The committee and board review executives’ short-term objectives, as proposed by the president and CEO, set the president and CEO’s
short-term objectives, and assess president and CEO performance.
The short-term incentive plan is designed as follows:
· 30% corporate balanced scorecard: Combination of financial and non-financial metrics; reviewed annually by the board
· 60% strategic: Objectives as agreed by the board for the president and CEO’s annual performance plan and by the president and
CEO for the executive performance plans; the objectives may include, but are not limited to, port performance, overall cargo capacity,
sector development, environment, and Indigenous relations
· 10% individual: Categories may vary by role, are agreed annually in performance plan discussions, and may include culture and
engagement, succession planning and staff development, and individual contribution
Appendix: Port authority compensation disclosure 2022
41
Financial report 2022
|
Medium-term incentive plan
Since 2019, the president and CEO and all executives have been eligible for a three-year cash incentive based on corporate performance.
Executives have a predetermined target value that will fluctuate based on performance. The awards and payment are staggered as follows:
The medium-term incentive plan aligns executive compensation with completion of longer-term initiatives necessary to the port
authority’s strategic plan and the larger success of the port. To ensure the port authority retains and motivates key talent over the
span of these multi-year projects, all executives are eligible for annual medium-term incentive awards.
The 2019–2021 grant awarded in 2022 (referred to as “2022 Grant”) focused on strategic capital projects to build urgently needed
container capacity (the Centerm Expansion Project and Roberts Bank Terminal 2 Project) and road and rail projects throughout the
gateway. Collectively, these projects are critical to the ability of the port and port authority to meet Canada’s trade objectives. Container
capacity on Canada’s west coast is projected to be exhausted by the mid- to late 2020s, and rail network capacity being delivered
through gateway projects is essential to grow trade across all sectors over the coming decade.
Pension benefits and other perquisites
Executives of the port authority are provided with the same structure of group benefit coverage available to all employees, including life
and disability, medical, extended health, and dental insurance, and a health spending account.
Executives are entitled, unless grandfathered in a legacy defined benefit pension plan, to a registered retirement savings plan (RRSP)
contribution and standard health/insurance benefits consistent with the broad employee base and private sector practices. As part of the
evolution of pay mix, the board reaffirmed this distinctly different (and lower) emphasis on defined benefit pension plans in favour of the
incentive plans.
In 2020, in alignment with the revised compensation philosophy, the port authority amended eligibility and availability of executive
retirement plans to ensure cost and liability management and to transition some value formerly accounted for in pension plans to
performance-based incentives.
Mr. Xotta’s defined benefit pension plan benefit is capped based on his 2019 salary and target bonus for that year. In December 2022
he transitioned from the defined benefit pension plan into the defined contribution pension plan arrangements that are available to other
members of the executive team. When he retires from the port authority, he will be paid a prorated lump sum retiring allowance based on
the pension payments that would have been made to him under the defined benefit pension plan had he retired on December 1, 2022.
The retiring allowance is capped and will not increase if he continues working after December 1, 2025.
2020
2020 – 2022
Grant
2021 – 2023
Grant
2022 – 2024
Grant
Beginning of performance period End of performance period
Payout
Grant
Jan Dec
Vintage
2021
2022
2023
2024
2025
|
Vancouver Fraser Port Authority
42
2022 realized management compensation tables
Retirement plans
While no longer open to new entrants, the port authority sponsors a number of legacy retirement plans, several of which relate to former
port authorities—including the Fraser River, North Fraser, and Vancouver port authorities that were amalgamated to form the Vancouver
Fraser Port Authority in 2007. Details of the retirement plans are set out below.
Defined benefit pension plans
Employees hired by the former Vancouver Port Authority prior to March 1, 1999 and currently employed by the Vancouver Fraser Port
Authority are members of the Vancouver Port Authority defined benefit pension plan. One of the current members of the executive team
is a member of this plan. Employees’ contributions are 4% of pensionable earnings up to the year’s maximum pensionable earnings under
the Canada Pension Plan, plus 7.5% of pensionable earnings that are in excess of the year’s maximum pensionable earnings. The amount
of an employee’s pension is based on 2% of the average of the best five years of pensionable earnings (defined as salary and bonus)
multiplied by credited years of service up to a maximum of 35 years. The annual pension payable is indexed based on increases in the
Consumer Price Index.
Appendix: Port authority compensation disclosure 2022
R. Silvester,
president and CEO
V. Pang, chief
financial officer
P. Xotta, vice
president, operations
and supply chain
C. Stewart,
vice president,
infrastructure
D. Wilson,
vice president,
environment and
external affairs
1,677
851
795
856
745
4,924
2022
2022
2022
2022
2022
725
419
401
419
387
2,351
437
202
212
207
168
1,226
399
165
170
165
132
1,031
104
53
–
53
46
256
12
12
12
12
12
60
Name and
position
Total
compensation
A+B+C+D+E
Fiscal
year-end
Salary
A
Annual
incentive
B
Medium-term
incentive
(paid)
C
Pension
benefits
1
D
Other
benefits
E
1
Pension benefits represent the cash-based consideration for each incumbent. For P. Xotta, there were no cash-based payments made due to his participation in the defined benefit
pension plan; note he transitioned in December 2022 out of the defined benefit pension plan arrangement.
In ‘000s of dollars
43
Financial report 2022
|
The Vancouver Fraser Port Authority also provides a supplemental pension plan for defined benefit pension plan members. The
supplemental pension plan provides pension benefits in excess of the maximum permitted under the current tax rules that apply to the
basic pension plans. The supplemental pension plan provides for employer and employee contributions, in accordance with the terms of
the plan; the employer contributes the additional amounts required to provide the threshold benefit for each plan. The normal retirement
age under the basic pension plans and the supplemental pension plan is 65. Members are eligible to retire with an unreduced pension
when they have attained age 60 and completed at least two years of membership service or attained age 55 and have at least 30 years
of membership service.
Defined contribution plans (group registered retirement savings plan and defined contribution pension plan)
On March 1, 1999, the Vancouver Port Authority ceased participation in the federal superannuation plan; following that date, all employees
hired became members of the Vancouver Fraser Port Authority’s group registered retirement savings plan. Employee contributions are
from 1% to 7% of annual earnings (defined as salary and incentive payments), and the Vancouver Fraser Port Authority makes a matching
contribution equal to the total employee contributions.
Employees hired by the former F
raser River Port Authority on or before December 31, 2007 who became employees of the Vancouver
Fraser Port Authority as a result of the port authorities’ amalgamation are members of the Fraser River Port Authority defined contribution
pension plan. Employee contributions are from 5% to 7% of annual earnings (defined as salary and bonus), and the Vancouver Fraser
Port Authority makes a matching contribution equal to the total required contributions of the employee.
The port authority also provides a supplemental non-registered savings plan for all employees who are members of the defined
contribution plans and are restricted by the registered retirement savings plan contribution limit. The defined contribution supplemental
pension plan provides for an employer–employee match for contributions that are in excess of the maximum allowable as a deduction
under the Income Tax Act. The port authority also contributes an additional amount equal to $3 for every $7 combined for employee and
employer contributions.
Design: Letterbox
Our mission
To enable Canada’s trade objectives, ensuring safety, environmental
protection, and consideration for local communities.
Our vision
For the Port of Vancouver to be the world’s most sustainable port.
Our definition of a sustainable port
A sustainable port delivers economic prosperity through trade, maintains
a healthy environment, and enables thriving communities through
collective accountability, meaningful dialogue, and shared aspirations.
Our values
Accountability
Collaboration
Continuous improvement
Customer responsiveness
Vancouver Fraser Port Authority
100 The Pointe, 999 Canada Place
Vancouver, B.C. V6C 3T4 Canada
t: 1.604.665.9000
f: 1.866.284.4271
e: info@portvancouver.com
portvancouver.com
