## 3.3 CORE COMPETENCIES 

Our core operational competencies are: 

## bRAnD EquITy 

High Liner is the leading Canadian seafood brand, with a leading retail market share. The retail market share that we are using to measure ourselves against includes mass merchandisers, general merchandisers, club stores and distributors, in addition to the grocery channel. We are the preferred seafood brand, and the value of our leadership position is not recorded in our financial statements. The strength of our brand reputation can be leveraged into growth with new species, in new channels, and to new customers. The brand also has a positive impact on our food service business where we are well known for our innovative, quality products and superior service. 

High Liner  is currently building brand awareness in the U.S. Well known in U.S. club stores for the launch of premium products under the High Liner  brand and the umbrella branding of Fisher Boy  and Sea Cuisine  brands further strengthen our market position in traditional grocery outlets. Fisher Boy  already has strong brand recognition in certain regions of the U.S. and Sea Cuisine  is expanding its ACV. 

In the U.S. food service market, the FPI  brand is also well known for its product innovation and quality products. It is one of the most recognizable brands in the U.S. food service market. The Viking  brand increases our share of the market for broad line value-added seafood products in the U.S. food service industry, making us one of the largest suppliers of value-added seafood products to that market. In addition, the Icelandic USA Acquisition makes us the largest supplier of value-added seafood to the U.S. food service market. 

## PROCuREMEnT ExPERTISE 

We are seafood experts, and procure seafood on world markets from a position of strength. We have no harvesting or farming operations, we procure many species from around the world, accessing product from various fisheries in different parts of the globe. This provides us with a continuity of supply, without the investment in capital necessary for fishing or farming operations, and allows us to focus on what the customer wants rather than trying to sell what is caught. Our procurement group’s proprietary Internet-based procurement and inventory management system enables the purchase of approximately 30 species of seafood from geographically diverse suppliers in approximately 30 different nations. The results are lower raw material costs, better predictability of raw material supply and pricing, high quality, reduced risk and better inventory management. Our expertise has also allowed us to competitively outsource low value-added, labour-intensive products to other processors, freeing capacity in our own plants for more specialized, and higher value-added products. Lastly, our procurement knowledge has provided the freedom to develop products 

based on changing consumer tastes. We can be flexible, and now we more quickly respond to trends and tastes as they emerge. Our joint venture in China and the addition of a primary processing plant in China strengthen our control over seafood supplies. 

## CuSTOMER RELATIOnSHIPS 

We have been supplying food products to major grocery retailers and food service distributors for decades. We have developed strong relationships with our customers through excellent customer service and brand recognition. We reach our consumers through these exceptionally strong customer relationships. We sell to most of the retail chains and to the major club stores in North America and most food service distributors in Canada and the U.S. We have ensured that our infrastructure is capable of meeting the exacting demands of these customers, for both excellent products and delivery service. 

## DIFFEREnTIATED InnOVATIVE PRODuCTS 

Innovation is one of our core values and we exhibit this especially in our product line. We strive to develop and launch new products that are differentiated from others in the market. For example, in late 2010 we launched a new innovative product line in the U.S. food service channel called FireRoasters . Due to the success of FireRoasters  we are expanding its distribution to U.S. retail, and Canadian retail and food service channels. It is a line of value-added, flame-seared seafood product that is unlike anything in the market today. During 2011, we created more than 125 stock keeping units for new products. High Liner’s Market Cuts , which were launched in 2011 in Canadian retail, won the “Best New Product Award 3 ” in the frozen fish category in January 2012. Our premium products in the U.S. and Canada have been an excellent example of our innovation in seafood products. Increasing the depth of our product line by adding new species from aquaculture has allowed us to develop even more innovative products. 

## LOW bREAk-EVEn POInT, SCALAbLE OPERATIOnS 

Our business model has a low break-even point. We are no longer in the capital-intensive fishing operations, but instead rely on our procurement expertise. Our business has relatively low fixed costs and proportionately more variable costs, which means that the break-even point for the Company is low. Our sales more than doubled since 2007, and they are expected 1  to increase significantly in 2012 as a result of the Icelandic USA Acquisition; however, our selling, general and administrative costs that are primarily fixed costs increased at a much slower pace. Specifically, our selling, general and administrative costs, excluding stock options, as a percentage of sales in 2007 were 14.3%, but this has now dropped to 10.7% in 2011 and is expected 1  to decrease even further in 2012. We are 1  well positioned to continue to increase sales and profitability without significant increases in fixed cost. 

