In 2010, we amended the terms and conditions of our non- voting equity shares to provide for a right of retraction for a limited period of time. Under this temporary retraction right, each holder of High Liner’s non-voting equity shares could elect to have High Liner repurchase that holder’s non-voting equity shares for a retraction price of $8.00 per share between April 7, 2010 and April 30, 2010. As well, we amended the conditions attached to our common shares to permit each common share to be converted into a non-voting equity share at any time at the option of the holder after the expiry of the non-voting equity share temporary retraction right. As a result, 3,185,030 non-voting equity shares were retracted under the temporary retraction right for $25.5 million in connection with the temporary retraction right. This was financed by the utilization of cash on hand and draws on our working capital lines. 

The retraction of our non-voting equity shares resulted in an increase of $8.9 million in contributed surplus on our balance sheet in fiscal 2010. As the cost of the retraction was less than the assigned value of the shares, the difference represents a contribution by the original shareholders that accrues to the benefit of the remaining shareholders. Since a company cannot earn a profit from the acquisition of its own shares, the difference is not included in retained earnings, but credited to contributed surplus. The amount credited to contributed surplus was equal to the difference between the redemption cost and the assigned value of all shares, regardless of whether they were retracted. 

In 2010, we granted a waiver under our shareholder rights plan in respect of a reorganization of our largest shareholder. To facilitate the waiver, the Company redeemed its shareholder rights under the plan adopted in December 2007 and adopted a new shareholder rights plan on substantially the same terms as the 2007 shareholder rights plan. Under the replacement shareholder rights plan, one right was issued in respect of each common share and non-voting share of High Liner outstanding to holders of record on July 23, 2010. The rights that were issued under the 2007 shareholder rights plan were redeemed at a price of $0.00001 per right. The cost of the redemption was not material to the Company. Although the new shareholder rights plan was effective immediately, its adoption was subject to ratification by the shareholders, which was obtained on January 5, 2011 at a special shareholders' meeting. 

## DIVIDEnDS 

The quarterly dividend for the first quarter of 2010 was $0.075 per common and non-voting equity share. The dividend for the second, third and fourth quarters of 2010 was increased to $0.085 per common and non-voting equity share. In the first quarter of 2011, we increased the quarterly dividend again to $0.09 per common and non-voting equity share, followed by a further increase to $0.10 per common and non- voting equity share for the remaining quarters in 2011. The dividend policy reflects our confidence in our growth strategy, together with significant improvements on our balance sheet since divesting our fishing assets. 

On February 22, 2012, the Directors approved a quarterly dividend of $0.10 per share on the Company’s common and non-voting equity shares payable on March 15, 2012 to holders of record on March 5, 2012. 

These dividends are “eligible dividends” for Canadian tax purposes. 

Our capital management practices are described at length in Note 23 to our annual financial statements. 

## DISCLOSuRE OF OuTSTAnDInG SHARE DATA 

On March 15, 2012 13,337,906 common shares, 1,788,062 non-voting equity shares and 852,317 stock options were outstanding. The stock options are exercisable on a one-for- one basis for common shares of the Company. 

## 3.2 OPERATIONAL RESOURCES 

Our organic growth plans can be achieved without significant operational expansion. 

Our existing operational resources include: 

## PLAnT CAPACITy 

Our seven manufacturing facilities have ample production capacity to meet forecasted demands. Our ability to source new products is not limited to our own production. We purchase significant quantities of frozen fillets as finished goods, and some of our value-added products are purchased as finished goods. 

## DISTRIbuTIOn CEnTRES 

Our Lunenburg, Portsmouth and Newport News facilities include large distribution centres. We lease a U.S. distribution centre in Peabody, Massachusetts, which we operate ourselves. We also utilize third-party cold storage/ distribution centres to supplement our facilities when needed. We have Directors of Logistics in each Company location to ensure that the warehousing and transportation of our products is handled in cost-effective and customer- service-oriented methods. 

## TECHnOLOGy 

Our business is simplified through an enterprise-wide business management system, using Oracle  software. We have also developed a proprietary internet-enabled procurement system that allows us to manage procurement online in real time. Business intelligence software allows us to manage our information on a real-time basis to help us make business decisions quickly, manage inventory and accounts receivable and provide more informative financial disclosure. We have ensured that we are equipped to respond to customer demands for electronic transmission of business documents, including invoices, purchase orders and payment confirmations. In 2011, we have embarked on a renewal of our Product Life Cycle systems through a purchase of Oracle  software. We are currently implementing the Global Specifications Management software through the company. 

