Other commodities, whose fluctuating market prices may affect our financial results, are flour, paper products and frying oils. The company’s Price Risk Management Policy dictates that we use fixed pricing with suppliers whenever possible but allows the use of hedging with costless tunnels or swaps if deemed prudent. During 2010 and 2011, we have been able to deal with this risk to management’s satisfaction using contracts with our suppliers. World commodity prices for flour, corn and soy and canola oils, important ingredients in the manufacture of many of the Company’s products, decreased in 2011 but are again trending upward for 2012. Currently, we are still working with fixed price contracts with our suppliers and have most of 2012’s commodity under contract. 

## 8.6 FOOD SAFETy 

Senior management accountability: Mario Marino President and Chief Operating Officer Canadian Operations; Keith Decker, President and Chief Operating Officer High Liner Foods (USA) 

Board oversight accountability:  Board of Directors 

Our brand equity and reputation are inextricably linked to the quality and safety of our food products. We must be vigilant in ensuring our products are safe and comply with all applicable laws and regulations. Consumers are also increasingly better informed about conscientious food choices. 

At High Liner, food safety is our top priority. All of our processing plants have the proper State or Provincial and Federal licences to operate. The United States requires its seafood processing plants to adopt a quality management plan known as HACCP (Hazard Analysis of Critical Control Points). Our plants in Portsmouth, New Hampshire; Danvers and Malden, Massachusetts; and Newport News, Virginia; are regularly inspected and meet or exceed all HACCP requirements. 

In Canada, all seafood-processing plants are required to adopt a QMP (Quality Management Plan) covering the regulatory and safety aspects of food processing. High Liner’s QMP has been approved by the Canadian Food Inspection Agency and has been in good standing since inception of this requirement. Canada’s QMP is an accepted standard under the U.S. HACCP system. Our Lunenburg and Burin facilities fall under this regulation and both plants meet or exceed the related regulations. 

Plants outside of North America must also pass HACCP audits to be able to export products to the U.S. All of the Company’s non-North American suppliers operate HACCP approved plants. The Canadian Food Inspection Agency (CFIA) must inspect food that is procured outside of Canada. The Food and Drug Administration (FDA) inspects food that enters the United States. In addition, all purchases are subject to quality 

inspection by the Company’s own quality inspectors. We have strict specifications for suppliers of both raw material and finished goods to ensure that procured goods are of the same quality as products made in our own plants, as indicated in our Supplier Standards and Audit Manual. 

We employ several experts in this area, including food scientists, quality technicians, raw material inspectors, and labelling and nutritional consultants. We also have a supplier code of conduct and retain independent auditors to monitor compliance. 

The Company has a Quality Steering Council with all senior quality personnel in the Company involved. Their mission is to ensure that High Liner has the best policies, consistently applied throughout the Company as well as implementing audit processes and ensuring quality personnel are adequately trained. Quality and food safety, including the implementation and maintenance of state-of-the-art product specification and traceability systems, were strategic goals of the Company in 2010 and progress was made on these initiatives in 2011. 

## 8.7 TEChNOLOgy 

Senior management accountability: Kelly Nelson, Executive Vice President, CFO & Secretary 

Board oversight accountability:  Audit Committee 

Our technology infrastructure is critical to the daily requirements of our business. The integrity and availability of information stored on that infrastructure must be assured. The inability to process customer payments, manage our supply chain, and operate manufacturing equipment due to loss of technology could shut down operations and impact our ability to deliver products to market. Numerous controls have been implemented to manage technology risk, including a comprehensive technology business recovery plan and offsite backup technology centres. We also use a minimal number of technology platforms. With our leading-edge enterprise-wide computer software systems (principally Oracle ®  and Lotus Notes ® ) and our investment in internet- enabling connectivity with suppliers and customers, we are able to control our business processes. 

We have a detailed business recovery plan for all our administrative systems, which includes backup services for our computer operations. In 2011, we expect 1  to improve these plans moving to a high-availability platform to ensure our customers do not experience any changes in service levels due to computer failures. 

We purchased new Product Life Management software from Oracle  in 2011 and are implementing the Global Specifications Management module. This initiative is part of our renewal of systems related to product safely, traceability and new product development as High Liner continues to invest in this area to keep our leadership position. 

