## AbILITyTO MAnAGE MARGInS 

As we are a significant supplier to our customers, we are important to them. They value our brands, our differentiated products, and the continuity of supply. Likewise, we are a large and well-respected customer to our suppliers, and have significant procurement expertise. Combined, these strengths allow us to manage the margins we generate on our sales, either by changing prices to our customers when necessary or qualifying for better prices from our suppliers. 

## GOVERnAnCE 

Our 2011 Management Information Circular includes full details of our governance structures and processes. 

We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed in filings made pursuant to National Instrument 52-109 is recorded, processed, summarized and reported within the time periods specified in the Canadian Securities Administrators’ rules and forms. In accordance with National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, our certifying officers have limited the scope of their design of disclosure controls and procedures, and our Company’s internal control over financial reporting to exclude controls, policies and procedures relating to the Icelandic USA Acquisition, as it arose in late 2011, and they have not yet performed sufficient procedures to include it in our certifications. National Instrument 52-109 permits a business that an issuer acquires not more than 365 days before the issuer’s financial year-end to be excluded from the scope of the certifications, to allow it sufficient time to ensure controls, policies and procedures are effective. This operation will be transitioned to High Liner systems in 2012 and the scope limitation for it will be removed for the fiscal 2012 year-end certificates. Summary financial information for the Acquisition for the period from the acquisition date of December 19, 2011 to December 31, 2011 includes sales of US$8.7 million, and Adjusted EBITDA of US$0.9 million. Information concerning assets and liabilities acquired is provided in note 4 to our consolidated financial statements. 

Our Chief Executive Officer and Chief Financial Officer have evaluated the design and effectiveness of our disclosure controls and procedures as of December 31, 2011. They have concluded that our current disclosure controls and procedures are designed to provide, and do operate to provide, reasonable assurance that (i) information required to be disclosed by the Company in its annual filings or other reports filed or submitted by it under applicable securities legislation is recorded, processed, summarized and reported within the prescribed time periods, and (ii) material information regarding the Company is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. 

In addition, our Chief Executive Officer and Chief Financial Officer have designed or caused to be designed under their supervision, internal controls over financial reporting (ICFR) to provide reasonable assurance regarding the 

reliability of financial reporting and the preparation of financial statements for external purposes. Further, our Chief Executive Officer and Chief Financial Officer have evaluated, or caused to be evaluated under their supervision, the effectiveness of the design and operation of ICFR at the financial year-end and have concluded that our current ICFR was effective at the financial year-end based on that evaluation. There have been no material changes to the Company’s internal controls during the year. 

## 4. OThER ITEMS IMpORTANT TO UNDERSTANDING OUR RESULTS 

## 4.1 ACCOUNTINg STANDARDS 

As mentioned earlier in this document, 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. Our fiscal 2011 financial statements are our first annual financial statements since we adopted IFRS. Complete details on our transition to IFRS are included in note 26 to our consolidated financial statements that are attached to this document. 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. This is only slightly different than the $6.7 million that we disclosed in our fiscal 2010 MD&A, due to small adjustments made as we finalized the transition in 2011. 

Our transition to IFRS went very smoothly. Our information systems were capable of handling our IFRS requirements. We provided training to our Audit Committee members, senior management, and those responsible for the day-to- day IFRS accounting. We have assessed and made changes to our disclosure and internal controls as necessary. The net changes to our financial results and statement of financial position were not significant for the Company and the IFRS transition adjustments did not negatively impact our financial covenants; therefore, we did not have to renegotiate our existing lending agreements or other legal agreements. The adoption of IFRS has not impacted the way in which we measure our financial performance, and commentary included in this MD&A reflects changes in the business environment and other factors, unless we have specifically identified the impact being related to transition to IFRS. 

In addition to the existing IFRS standards that the Company adopted for 2010 and 2011, the International Accounting 

