## 8.8 ACqUISITIONS 

Senior management accountability: Henry Demone, President and Chief Executive Officer 

Board oversight accountability: Board of Directors 

Our strategy considers growth by acquisition. The Company may not be able to carry out its strategy of acquisition of other frozen seafood companies, as that depends in part on the availability of suitable candidates. In addition, the Company may face competition for the acquisition of attractive processors from other consolidators in the frozen food industry who may be larger or better financed than the Company. Our ability to successfully integrate acquisitions into our existing operations could affect our financial results. We may seek to expand our business through acquisitions and may divest underperforming or non-core businesses. Our success depends, in part, upon our ability to identify such acquisition and divestiture opportunities and to negotiate favourable contractual terms. The failure to obtain proper regulatory approvals could adversely affect our growth strategy. 

## 8.9 LIqUIDITy 

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

Board oversight accountability:  Audit Committee 

Our primary sources of working capital are cash flows from operations and borrowings under our credit facilities. We actively manage our relationships with our lenders and have in place adequate credit facilities until December 2016 when the working capital revolver facilities are scheduled to be renewed. 

We monitor risk of a shortage of funds using a detailed budgeting process that identifies financing needs for the next 12 months as well as models that look out 5 years. Working capital requirements are monitored daily and a procurement system provides information on commitments. This process projects cash flows from operations. Our objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, letters of credit, bank loans, notes payable, and finance leases. Our objective is that not more than 50% of borrowings should mature in the next 12-month period. Less than 11% of our long-term debt will mature in less than one year at December 31, 2011 based on the carrying value of borrowings reflected in the financial statements. Our long-term debt is described in Note 13 of our financial statements and has annual required minimum principal payments of US$2.5 million plus, beginning in 2013, 50% of the prior year’s defined free cash flow. At December 31, 2011 and at the date of this document, we are in compliance with all covenants and terms of our banking facilities. 

As a result of the volatile capital markets and the resulting widespread drop in public issuer valuations in the latter part of 2008, our defined benefit pension plans have experienced losses. However, the capital markets improved in 2010 and 2011, reducing the losses. The actuarial valuation of our largest defined benefit pension plan was as of September 2008 and showed a going concern surplus and a small solvency deficit that will be funded over five years. The next actuarial valuation is due to be effective no later than September 2011 and in the process of being compiled for filing no later than September 2012. We anticipate the required annual contributions after the valuation is completed will increase by more than $1.0 million. As well, our move to IFRS for accounting purposes has crystallized these losses in retained earnings, thereby enabling us to exclude them from income. Late in 2009, we changed the asset mix of our defined benefit pension plans with the objective of reducing the volatility of the plan’s anticipated funded position. This has resulted in investing part of the portfolio in fixed income assets with a duration similar to that of the pension obligations. 

## 8.10 SUSTAINABILITy, CORPORATE RESPONSIBILITy AND PUBLIC OPINION 

Senior management accountability: Henry Demone, President and Chief Executive Officer 

Board oversight accountability: Board of Directors 

As discussed in Section 1.3 of this document, we have publicly announced that we will source all of our seafood from certified sustainable or responsible fisheries and aquaculture farms by the end of 2013. We will require the seafood we purchase be certified by the Marine Stewardship Council (MSC), the Global Aquaculture Alliance’s (GAA) Best Aquaculture Practices (BAP) program or the Aquaculture Certification Council or under some other acceptable regime. 

Major customers in all areas of the Company’s business are requiring that seafood purchased by them will need to be certified as coming from a sustainable fish resource or from aquaculture farms that adhere to acceptable sustainability practices. In 2011, approximately 55% of our wild-caught seafood and 68% of our aquaculture purchases came from certified fisheries, representing substantial increases over 2010. 

We made sustainability a strategic goal for 2010 and 2011 and have added dedicated resources at the senior level to develop the sustainability plan for the company. In the long term sustainability will need to include policies on green issues such as energy consumption, packaging, and the like. It will also involve our human resources practices and policies. 

