LETTER TO SHAREHOLDERS

In 2014, High Liner Foods moved closer to its vision to become the leading supplier of frozen seafood in North America, doubling its market share in value-added frozen salmon products, setting the stage for improved supply chain efficiency and embarking on a mission to radically simplify selecting, preparing and enjoying seafood at its best.

Henry Demone, Chief Executive Officer

Reported sales in USD surpassed the billion dollar mark for the first time in our history, rising 11.0 percent to $1.05 billion and resulting in compound annual sales growth of 16.7 percent since 2010. High Liner Foods’ financial results, however, were below expectations. Excluding the impact of the Atlantic Trading acquisition in Q4 2014 and the American Pride acquisition in Q4 2013, sales in domestic currency increased by only $16.1 million as we continued to face a soft sales environment in the U.S. foodservice sector along with significant increases in raw material costs and pricing pressure resulting from consolidation in the food retailing industry. Results were also adversely affected by a falling Canadian dollar which reduced reported sales by $22.2 million relative to the conversion impact in 2013. As a result of the same factors, adjusted EBITDA decreased by $2.0 million, as the positive impact of the Atlantic Trading and American Pride acquisitions, and lower distribution costs and higher margins in our U.S. business, were offset by lower sales volumes and lower margins in our Canadian business. Adjusted Net Income decreased by 6.1 percent to $38.8 million and diluted EPS based on Adjusted Net Income was $1.24 per share, reflecting a 2-for-1 split of High Liner Foods’ common shares on May 30, 2014.

While U.S. restaurant industry sales increased modestly during the past year, the casual dining segment, which is a key sales driver for High Liner Foods, is in a period of intense competition with “fast-casual” restaurants broadening and improving their menus to attract time-pressed and health-conscious consumers.

Within this environment, we have been working closely with customers to develop innovative new products, reduce the complexity and cost of our operations and deliver better value to our customers and consumers every day. We are dedicated to nothing less than building a culture of operating excellence that is the best in the business. As in past years, we are measuring our progress in the context of High Liner Food’s three most important strategic goals.

Record sales in excess of
$1 billion for the first time

Compound annual sales growth since 2010

71% of sales are in the U.S. and 29% in Canada

79% of sales are from High Liner Foods branded products and 21% from private-label products

67% of sales are to foodservice customers and 33% are to retail customers

65% of sales are from value-added products and 35% from unprocessed products

* based on 2014 sales and on a pro-forma basis including Atlantic Trading

Profitable growth

While challenging market conditions have slowed the pace of the Company’s growth in the past two years, we remain focused on our aspirational goal of growing EBITDA to $150 million by the end of 2016. To reach this number, we are focused on achieving internal growth through continued innovation and product expansion, lowering the cost of operations through optimization of our supply chain and will also continue to look for opportunities to further consolidate the frozen seafood industry in North America.

We are determined to achieve higher rates of internal sales growth by working closely with our customers, particularly those in the U.S. restaurant industry. Product innovation is the key to our efforts. High Liner Foods introduced several new products during the year, including Flame-Seared Guinness® BBQ-glazed Atlantic Salmon, which won the 2014 Best New Foodservice Award at the 2014 Seafood Expo North America. It is one of the offerings in the successful GUINNESS® Distinctive Seafood line, which blends some of our most popular Icelandic Seafood brand cuts with the delicious taste of real stout. On the retail side of the business, Pan-Sear™ Traditional, won Canadian Living’s Best New Product Award for 2014 in the “Frozen Fish” category and High Liner Foods was voted the family favourite in the “Fish Fillets” (seasoned or breaded) and “Fish Sticks” categories in the 2014 Canadian Family Food Awards.

Our commitment to continued leadership in product innovation can also be seen in the opening of High Liner Foods’ U.S. culinary research center in December 2014, part of the Company’s new U.S. headquarters in Portsmouth, New Hampshire. Located in close proximity to one of our key manufacturing facilities, this state-of-the-art center will allow us to collaborate more effectively with corporate partners and customers on the research, development and testing of new products for both the foodservice and retail segments of our business.

Acquisitions that complement and strengthen our product line and leverage our scale have been at the heart of High Liner Foods’ evolution into the largest value-added frozen seafood company in North America. This process continued in 2014 with the acquisition of the Atlantic Trading Company (“ATC”), one of the largest importers of Atlantic salmon in the U.S. With annual sales of $75 million to
$80 million, ATC will more than double High Liner Foods’ annual sales of frozen salmon products and has enhanced our product line with premium fillets and portions that are sustainably sourced from Chile and Norway. The acquisition was also immediately accretive to earnings.

Looking ahead, we believe further consolidation of the seafood industry is inevitable. It is driven in large part by the needs of retail and foodservice customers who prefer to deal with fewer trusted suppliers that can lower their cost, meet all product requirements and deliver the highest possible standards in on-time delivery, quality assurance, food safety, traceability and sustainable sourcing. High Liner Foods is uniquely positioned to meet those needs and also possesses the core acquisition and integration experience required to build on its leadership position in the industry.

In November 2014, High Liner Foods opened its new U.S. headquarters in Portsmouth, NH

High Liner Foods procures 30 species from 20 different countries

Supply Chain Optimization

Our goal regarding supply chain optimization is to reduce operating costs by
$20 million to $25 million annually through plant and supply chain efficiencies. In 2014, we selected and engaged the outside expertise required to succeed in this endeavour, given the significant scope of work to be undertaken. Cost savings will begin to be realized in 2015, with the full benefit being realized in 2016.

The project officially started in the third quarter of 2014, and we are pleased with the progress so far. A significant area of focus is on optimization at the individual plant level where areas such as labour productivity and yield improvement have been targeted. This work is well underway at all of our facilities, as are activities at the consolidated-entity level with a focus on the standardization and consolidation of ingredients and packaging, and the optimization of our global supply chain and procurement activities. As part of this process, we announced on January 9, 2015 our plans to cease operations in the second quarter of 2015 at our leased facility in Malden, Massachusetts, thereby reducing our production network to four owned plants in North America. This was a difficult but necessary decision to eliminate excess capacity and we have worked to redeploy as many people as possible within our other facilities.

All of these efforts reflect our corporate mission to radically simplify the seafood category for our customers so they can be confident in serving high-quality seafood products with consistently superior taste and value. At the most fundamental level, we are determined to make it easier than ever to do business with High Liner Foods. Thanks to our core values – customer-focused, responsible and innovative, we are building upon an already strong reputation with our customers.

In 2014, we received the Vendor of the Year Award from BJ’s Wholesale Club. This coveted award is presented each year to only one supplier across all of the company’s consumer goods departments in recognition of significant contributions to the continuing evolution of the quality, differentiation and value of the BJ’s Wholesale Club shopping experience.

We were also honoured to receive the prestigious Pinnacle Supplier of the Year Award from Foodservice and Hospitality Magazine. Introduced in 1988, the Pinnacle Awards shine the spotlight on companies and individuals that have demonstrated excellence in the areas of leadership, initiative and business excellence. We are very proud that High Liner Foods’ commitment to sustainability was a key driver behind this award as well as our receipt of McDonald’s Canada’s 2014 Sustainability Award. Other awards received during the year included the Supplier of the Year Award in the protein category from Flanagan Foodservice and the Supplier of the Year Award from ITWAL Limited in recognition of High Liner Foods’ excellence in product innovation, breadth of product offering, market support and customer service.

High Liner Foods and Bill DiMento, Corporate Director of Sustainability, were recently awarded Grand Champion Award by SeaWeb, an award SeaWeb created to recognize outstanding contribution across four key areas of global sustainability: leadership, vision, innovation and advocacy

We are committed to sourcing all of our seafood from certified sustainable or responsible fisheries and aquaculture

High Liner Foods received the McDonald’s Canada’s 2014 Sustainability Award for demonstration of real excellence in efforts relative to sustainability

Keith Decker, President and Chief Operating Officer

Succession Planning

High Liner Foods adopted succession planning as a third strategic goal in 2014. Given the significant number of retirements expected in the next 10 years, a sustained focus is required to develop and recruit the next generation of leaders who will advance our growth strategies and ensure the successful integration of future acquisitions.

During the past year, we were pleased to announce the addition of two talented individuals to our senior management team. Paul Jewer joined the Company in February 2014 as Executive Vice President and Chief Financial Officer (CFO) to replace long-time CFO Kelly Nelson upon his retirement. Paul was most recently CFO with a leading Canadian retailer. Peter Brown also joined the Company as President and Chief Operating Officer of our U.S. operations to replace Keith Decker who was promoted to his current role as President and Chief Operating Officer of High Liner Foods in September 2013. Peter started in May 2014, and as expected, his 25-plus years of experience in the food industry and exceptional leadership capabilities have made for a very smooth onboarding process.

In November, we announced that Mario Marino will be retiring from the Company as President and Chief Operating Officer of our Canadian operations. In accordance with our succession planning, and following a transition period of several months, we will fill the position internally with Jeff O’Neill, who will officially begin the role in May of this year. Jeff is currently Vice President, Sales and Marketing, Retail for the Canadian operations and has more than 20 years of experience with some of the world’s largest food companies.

So far, we have made significant progress in planning for succession at the senior-most levels of the Company. Over the next year, we will be completing plans at the Vice President level as well as pivotal positions at other managerial levels throughout the Company.

2015 Outlook

As for the year ahead, we see significant opportunity for growth, both organically and through acquisition. We are working with our customers more closely than ever to stimulate sales, reduce costs and simplify the process of selecting, preparing and enjoying seafood for everyone touched by our business. Ongoing product innovation and optimization of the supply chain will be key to these efforts. Acquisitions will also play an important role in our growth, as the frozen seafood business continues to consolidate in favour of industry leaders such as High Liner Foods.

In closing, I would like to extend my appreciation to all of our employees for their hard work and dedication over the past year. In particular, I wish to thank Mario Marino for his outstanding contributions to High Liner Foods’ growth and success over the past 34 years. Mario has been a wonderful colleague and friend to many people at High Liner Foods and throughout the industry and we wish him the very best in his retirement.

I would also like to acknowledge Tom MacQuarrie and Matthew Hennigar, both of whom will not be standing for re-election to the Board at the Company’s upcoming annual general meeting. Tom has served as a director of the Company since 1985 and Matthew since 2012 and I wish to thank them for their contributions to High Liner Foods’ success.

Finally, I would like to thank the many valued customers, suppliers, business partners and investors whose support has been so vital to our growth and success. On behalf of all of us at High Liner Foods, I look forward to reporting on our continued progress in the year ahead.

(signed)
Henry Demone,
Chief Executive Officer
March 12, 2015