## MANAGEMENT’S DISCUSSION AND ANALYSIS 

## INTRODUCTION 

Management’s discussion and analysis (MD&A) provides management’s perspective on High Liner, our performance, and our strategy for the future. 

## IMPORTANT NOTES 

## We, us, our, Company, High Liner 

In this MD&A, these terms all refer to High Liner Foods Incorporated, and its businesses and subsidiaries. 

## Review and approval by the Board of Directors 

The Board of Directors, on recommendation of the Audit Committee, approved the content of this MD&A on March 15, 2012. This MD&A includes High Liner’s operating and financial results for fiscal 2011 and fiscal 2010, and should be read with our Consolidated Financial Statements. 

## Adoption of International Financial Reporting Standards 

We adopted International Financial Reporting Standards (“IFRS”) for our fiscal 2011 year, with restatement of fiscal 2010 comparatives. Our transition date under IFRS was January 3, 2010, which is the beginning of our fiscal 2010 year. Complete details on our transition to IFRS are included in note 26 to our consolidated financial statements that are included in the Annual Report on page 103. While there were many changes in numbers relating to our financial results and statement of financial position, our adoption of IFRS did not result in material changes to EBITDA or net income. We note, however, that the book value of shareholders’ equity as at our transition date increased by $6.1 million, primarily due to the write-up of property, plant and equipment. 

Financial information contained in this MD&A for fiscal 2011 and 2010 are comparative as we restated 2010 to be in accordance with IFRS. Financial information prior to January 3, 2010 has not been restated as the transition rules did not require us to do so. Where historical information is presented in this MD&A that has NOT been restated to IFRS, we have noted it as such. 

## Other important documents 

Additional information relating to High Liner, including our most recent Annual Information Form, is available on SEDAR’s website at www.sedar.com, and in the Investor Information section of High Liner’s website at www.highlinerfoods.com. 

## Comparability of periods 

The Company’s fiscal year-end floats, and ends on the Saturday closest to December 31. Most of our fiscal years have 52 weeks, but from time to time, some fiscal years will have 53 weeks. Both 2011 and 2010 had 52-week years. 

## Quarterly and annual comparisons in this MD&A 

Unless otherwise indicated, all comparisons to the fourth quarter of 2011 are against the fourth quarter of 2010, and all comparisons to fiscal 2011 are against fiscal 2010. References to the fiscal years 2010, 2011 and 2012 are to the 52 weeks ended January 1, 2011, December 31, 2011 and December 29, 2012, respectively. 

## Accounting estimates and assumptions 

The preparation of consolidated financial statements under IFRS requires management estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses 

during the reporting period. We use accounting estimates to determine various items, including allowance for doubtful accounts receivable, estimated amounts owing to customers for various sales and promotional programs and other costs to be invoiced to us after period end but relating to the accounting period in question. We base our estimates on historical experience, current trends and various other assumptions that are believed to be reasonable under the circumstances. If final amounts differ from estimates, it is expected to have little or no impact on our financial condition. In our judgment, none of the estimates discussed in Note 2 (e) of the Consolidated Financial Statements for the period ended December 31, 2011 require High Liner to make assumptions about matters that are highly uncertain. None of the estimates is considered a critical accounting estimate, except as noted in Section 7. 

## Currency 

All dollar amounts are in Canadian dollars unless otherwise noted. Approximately two thirds of our operations, assets and liabilities are denominated in the United States currency. As such, foreign currency fluctuations affect the reported values of individual lines on our balance sheet and income statement. When the Canadian dollar strengthens, the reported values decrease and the opposite occurs when the Canadian dollar weakens. 

In some parts of this document we discuss balance sheet and operating items in domestic currency. This effectively means that the self-sustaining U.S. operations are converted to Canadian dollars at par. We have done this to show the true changes in domestic currency, eliminating the effect of fluctuating foreign exchange rates on the translation of our U.S. subsidiary. U.S. dollar denominated items in the Canadian operations continue to be converted to Canadian dollars at the balance sheet date for balance sheet items and at the exchange rate of the day the transaction occurs for income statement items. 

## Non-IFRS Financial Measures 

The Company reports its financial results in accordance with International Financial Reporting Standards. We have included in our Quarterly Report and this MD&A certain non-IFRS financial measures and ratios. These non-IFRS financial measures are Adjusted EBITDA, net debt and free cash flow. 

The Company believes these non-IFRS financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to other financial measures determined in accordance with IFRS. Our definition of Standardized Free Cash Flow and Adjusted EBITDA follows the October 2008 “General Principles and Guidance for Reporting EBITDA and Free Cash Flow” issued by the Canadian Institute of Chartered Accountants. These measures are defined in more detail later in this document. 

## Forward-looking statements 

This MD&A includes statements that are forward looking. Our actual results may be substantially different because of the risks and uncertainties associated with our business and the general economic environment. We discuss the principal risks of our business in Section 8 of this MD&A. We cannot provide any assurance that forecasted financial or operational performance will actually be achieved. If it is achieved, we cannot provide assurance that it will result in an increase in our share price. See Section 9 entitled “Forward-Looking Information”. 

