Maple Leaf Foods Annual Report 2015

FY2015 Annual Report · Maple Leaf Foods

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MAPLE LEAF FOODS INC.

2015 ANNUAL REPORT

Maple Leaf Foods is Canada’s leading
consumer packaged meats company,
headquartered in Toronto, Ontario. We make
high-quality, great tasting, nutritious and
innovative food products under leading brands
including Maple Leaf®, Maple Leaf Prime®,
Maple Leaf Natural Selections®, Schneiders®,
Schneiders Country Naturals® and Mina™.
Our Company employs approximately
11,500 people in its operations across
Canada and exports to many global markets
including the U.S. and Asia.

Table of Contents

ANNUAL REPORT | 2015 | MAPLE LEAF FOODS INC.

FINANCIAL HIGHLIGHTS

For years ended December 31

(In millions of Canadian dollars, except share information)

2015

2014(i)

2013(i)

2012(i) (ii)

2011(i) (ii)

Consolidated results
Sales
Adjusted Operating Earnings (Loss)(iii)
Net earnings (loss) from continuing operations
Net earnings(iv)
Return on Net Assets(iii) (v)

Financial position
Net Assets(v) (vi)
Shareholders’ equity(v)
Net Cash (Debt)(iii)

Per share
Adjusted Earnings (Loss) per Share(iii) (iv)
Net earnings (loss) from continuing operations(iv)
Net earnings(iv)
Dividends
Book value(v)

Number of shares (millions)
Weighted average
Outstanding at December 31

3,293
110
42
42
4.8%

1,705
2,053
282

0.58
0.30
0.30
0.32
15.20

140.2
135.1

3,157
(75)
(214)
710
(3.7)%

2,955
(136)
(141)
496
(0.2)%

1,729
2,244
486

(0.56)
(1.51)
5.03
0.16
15.70

141.2
142.9

2,124
1,581
(452)

(1.08)
(1.01)
3.55
0.16
11.27

139.9
140.3

3,075
57
(31)
89
9.4%

2,101
891
(1,171)

(0.05)
(0.23)
0.64
0.16
6.36

3,082
36
(47)
59
9.7%

1,907
865
(984)

(0.14)
(0.34)
0.43
0.16
6.18

139.4
140.0

138.7
140.0

(i) Unless otherwise noted, figures exclude the results of the Bakery Products Group, which are reported as discontinued operations. Refer to Note 22 of the Company’s 2015

audited consolidated financial statements for further information.

(ii) 2012 and 2011 figures have been restated for the impact of adopting the revised International Accounting Standard 19 Employee Benefits (“IAS 19”). Refer to Note 32 of the

Company’s 2013 audited consolidated financial statements for further information.

(iii) Refer to Non-IFRS Financial Measures on page 27 of the Company’s 2015 Management’s Discussion and Analysis.
(iv) Attributable to common shareholders.
(v) 2011–2013 have not been restated for the classification of the Rothsay business and the Bakery Products Group as discontinued operations.
(vi) Net Assets defined as total assets (excluding cash and deferred tax assets) less non-interest bearing liabilities (excluding deferred tax liabilities).

SEGMENTED OPERATING RESULTS

Protein Group

(In millions of Canadian dollars)

Meat Products Group
Sales
Adjusted Operating Earnings (Loss)
Total assets

Agribusiness Group
Sales
Adjusted Operating Earnings
Total assets

Protein Group
Sales(i)
Adjusted Operating Earnings (Loss)(i)
Total assets(i)

2015

2014

% Change

3,277
108
1,853

16
1
189

3,293
110
2,042

3,135
(80)
1,965

22
9
212

3,157
(71)
2,177

4.5%
234.9%
(5.7)%

(27.1)%
(84.3)%
(10.7)%

4.3%
253.1%
(6.2)%

Business Segments
The Meat Products Group includes value-added prepared meats, lunch kits and snacks, and fresh pork and poultry products sold under leading Canadian brands such as
Maple Leaf®, Schneiders® and many leading regional brands.

The Agribusiness Group includes Canadian hog production operations that primarily supply the Meat Products Group with livestock as well as toll feed sales.
(i) Numbers may not add due to rounding.

ANNUAL REPORT | 2015 | MAPLE LEAF FOODS INC.

MESSAGE TO
SHAREHOLDERS

To my fellow shareholders:

It was five years ago that the Management
and Board of Maple Leaf Foods initiated
one of the most significant supply chain
transformations in the North American food
industry. The objective was to structurally
expand our margins and secure the long-
term value of our Company. The path lay in
significantly reducing our manufacturing
costs through investing in scale plants and
technology to drive productivity gains.

Fast forward to 2015 and we are a
fundamentally different company.
Look at what we have accomplished:

• 100% of the over $1 billion

capital investment is behind us
and has been achieved within
expectations outlined in 2010

• We closed 12 sub-scale facilities,
treating people affected with
respect and fairness

• All our new plants are

operational and delivering
productivity gains as we
complete commissioning

• We rationalized over

600 products and reformulated
more than 1,200 others to
leverage the capabilities of
our new plants and scale
technologies

• We smoothly implemented an

integrated SAP platform and are
realizing the benefits

• We divested of our non-core

businesses to become a focused
protein company

• We established a streamlined

low cost structure

• Our EBITDA (Earnings Before
Interest, Tax, Depreciation
and Amortization) margin
increased from an average of
3.5% (2005–2012) to 8.7% in the
fourth quarter of 2015, with the
remainder of the path to our
strategic goal made up solely of
reducing identifiable ramp-up
inefficiencies

• We are generating positive cash
flow after years of investment
and change

• Since early 2016, the stock has
been trading between $22 and
$24, well above averages of
$18 a year ago and roughly $11
when we began this last leg of
the journey in 2010

2015 Recap
Completing our strategy resulted in
a sizable improvement in profitability
in 2015. Adjusted Operating Earnings
were $109.8 million (or $0.58 of
adjusted earnings per share),
compared to a loss of $75.5 million

(or an adjusted loss of $0.56 per
share) in 2014.

Throughout 2015, we built on a
consecutive trend of quarter-
over-quarter EBITDA margin
growth, ending the year at 8.7%, up
significantly from 1.5% at the end of
2014. This was delivered through a
combination of improved operating
efficiencies in our new prepared
meats plant network, pricing to
offset higher costs, an improved
sales mix, and strong results in
both our fresh pork and poultry
businesses. Through eliminating the
remaining ramp-up inefficiencies
at our prepared meats facility in
Hamilton, Ontario – the largest
in our network and the last to be
commissioned – we are confident
we will soon achieve our strategic
run-rate EBITDA margin target
of 10%.

With the onus of managing
significant change behind us,
we are sharpening our focus on
organizational efficiencies. Last
year, we streamlined our structure,
shedding over 400 positions, along
with implementing other cost
reductions. A low cost structure
will enable us to increase our
investment in growth, including
increased marketing spend behind
our brands, product innovation and
other strategic initiatives, such as
building a sustainable future.

Looking Ahead
Maple Leaf has Canada’s leading
brands and market shares in
prepared meats, fresh pork and
poultry products and a prepared
meats network that is competitive
on a North American scale. We are
using these assets to deliver higher
levels of profitable growth in our
core categories. In 2016, we have the
most robust platform of innovation

ANNUAL REPORT | 2015 | MAPLE LEAF FOODS INC.

ever launched by our Company.
We have materially increased our
investment behind marketing,
including strong campaigns behind
our flagship Maple Leaf brand.
We are re-launching Schneiders,
an iconic Canadian brand, with a
clear consumer proposition that
reinforces quality, tradition and old
world craftsmanship.

We are focusing our market
expansion on three new high growth
platforms: alternative proteins,
snacking and sustainable meat.

While our exploration into alternative
protein markets is in the early
stages, it is an intriguing opportunity.
The North American market for
non–meat based protein is forecast
to grow at 5%–8% annually, fuelled
by health and environmental
concerns. It is a natural extension
for Maple Leaf Foods, as Canada’s
leading meat company, to branch
out into alternative protein
products. We are continuing our
research into this emerging market
to assess potential paths to growth.

Snacking now represents
approximately 49% of our daily
food and beverage consumption
and is a dietary trend that is steadily
growing. It is a category dominated
by high sugar snacks, chips and
other lower nutrition foods, with a
dearth of healthy and good tasting
meat-based options. We completed
significant consumer and market
research throughout 2015, leading
to a launch this year of a new line
of natural meat snacks that are
moist and flavourful and provide
a healthy snacking option packed
with protein and essential minerals.
We believe there is significant
opportunity to leverage our strong
brands to increase our penetration
in this fast growing market.

Our most ambitious growth
platform is in sustainable meat,
where our progress is much
further advanced. Broadly defined,
sustainable meat focuses on
how animals are raised and the
associated nutritional, welfare and
environmental impacts.

In 2015, Maple Leaf launched a
comprehensive sustainability
strategy focused on advancing
nutrition and health, community
involvement, animal care and
environmental sustainability.
Our goal is to deeply embed
sustainability in how we operate,
and create business value
through addressing social and
environmental issues. As people
increasingly focus on what is in
their food and how it is produced,
there is significant opportunity in
building leadership in sustainable
meat: producing more natural,
nutritious foods; implementing a
strong animal care program; lending
our voice and resources to address
the critical issue of food insecurity;
and substantially reducing our
environmental footprint.

Our product innovations all utilize
simpler, natural ingredients and
conform to 2016 Health Canada
sodium guidelines. We are
completing an extensive review
of our products with a goal to
advance nutrition and simplify
ingredients across the portfolio. We
have committed to being a leader
in animal care and are launching
a comprehensive strategy in 2016
aimed at further developing our
culture, accountability, practices
and communications. We are well
along in meeting our commitment
to transition all sows we manage
from restrictive gestation crates to
loose housing, with approximately

III

14,500 sows transitioned by the
end of 2015. We are assessing
ways to accelerate the pace of
this important initiative with a
goal to advance the conversion
of our remaining barns, delivering
significant benefits from
both an animal welfare and a
commercial perspective.

We are now the largest processor of
“raised without antibiotics” pork in
North America and the leader in the
Canadian poultry industry. In 2016,
we are also launching community
involvement and environmental
sustainability strategies, with
ambitious plans and targets to
accelerate our progress in becoming
a sustainable meat company.

Our success is built on the strength
of many – from the dedicated
men and women who work at
Maple Leaf, to our suppliers, loyal
customers and consumers, to
our community stakeholders – and
I extend my very sincere thanks to
all of you. Our leadership team and
Board are energized and excited
about the years ahead. We have
successfully established a highly
competitive cost structure and
have the brands, market shares and
growth strategies to deliver strong
financial growth. We look forward
to rewarding our shareholders with
the benefits from many years of
investment and change.

Sincerely,

Michael H. McCain
President and CEO
February 2016

ANNUAL REPORT | 2015 | MAPLE LEAF FOODS INC.

I want to thank my colleagues
on the Board for their many
contributions. Like the culture of
Maple Leaf Foods, our Board is
highly engaged and we encourage
different perspectives, points of
view and open debate. We benefit
from interaction with Management,
which deepens our understanding
of the business, challenges and
opportunities. I offer a vote of
thanks to our Management and all
the people who define Maple Leaf
Foods, what we do, how we do it
and what we stand for.

To our shareholders, we thank you
for your investment in Maple Leaf
Foods. Your support has enabled
the Company to reach high ground,
with good visibility to alternative
paths to prosperity. Your thoughts
and perspectives are valued as
we weigh options for ongoing
deployment of capital to optimize
future profitable growth.

Sincerely,

David L. Emerson
Chairman

February 2016

MESSAGE FROM
THE CHAIRMAN

The past year was pivotal for Maple Leaf
Foods, as we completed the rebuild
of our prepared meats manufacturing
and distribution network. This massive
undertaking required significant investment,
rigorous management and careful oversight.
Maple Leaf is now positioned with a more
competitive cost base, high-quality products
and powerful brands. In combination with
our people, our values, and our commitment
to customers and the communities we serve,
this unlocks exciting potential for the future.
Our 2015 financial results provide a glimpse
into that future.

A key part of the strategy was the
divestiture of several non-core
businesses in order to strengthen
the balance sheet. Overseeing this
balance sheet restructuring was a
significant part of our deliberations
in 2015. Reflecting a strong cash
position, early in 2015 the dividend
per share was doubled to $0.08
per quarter, reflecting the Board’s
confidence in our progress. This
February, the Board approved an
increase to $0.09 per quarter. In
2015, we also entered into a Normal
Course Issuer Bid to counter the
dilutive effect of equity-based
compensation plans. By the end
of January 2016, $194.5 million
was expended to purchase the
full 8.65 million shares authorized
under the bid.

Anticipation of, and adaptation
to, market changes never
ends. Current shifts and trends
include industry consolidation,
accelerated cost reduction and
the increasing role of lifestyle and
social factors that are influencing
food purchasing decisions. The
management team views these
trends as opportunities. Coupled
with Maple Leaf Foods’ commercial
strengths, we have the most
advanced supply chain in the
Canadian prepared meats industry
and we are cost competitive with
our North American peers. We
have also adopted a sustainability
strategy focused on delivering
social, environmental and
commercial benefits.

ANNUAL REPORT | 2015 | MAPLE LEAF FOODS INC.

CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

Corporate Governance

The Board of Directors and Management of the Company are committed to maintaining
a high standard of corporate governance. The Board has responsibility for the overall
stewardship of the Company and discharges such responsibility by reviewing, discussing
and approving the Company’s strategic planning and organizational structure and
supervising Management with a view to preserving and enhancing the underlying value
of the Company. Management of the business within this process and structure is the
responsibility of the Chief Executive Officer and Senior Management.

The Board has adopted guidelines to assist it in meeting its corporate governance
responsibilities. The roles of the Board, the Chief Executive Officer, the Chairman and the
individual committees are clearly delineated. Together with the Chairman and the Corporate
Governance Committee, the Board assesses its processes and practices regularly to ensure
its governance objectives are met.

Composition of the Board of Directors

The Company’s directors are very experienced, high-calibre business leaders with diverse
relevant skills and competencies. The Board of Directors has assessed each of the Company’s
nine non-management directors to be independent.

A more comprehensive analysis of the Company’s approach to corporate governance
matters is included in the Management Proxy Circular for the May 4, 2016 annual meeting
of shareholders.

Board of Directors

William E. Aziz, CPA, CA
President and Chief Executive Officer,
BlueTree Advisors II Inc.
(Private management advisory firm)

W. Geoffrey Beattie
Chief Executive Officer,
Generation Capital
(Investment management firm)

Gregory A. Boland
President and Chief Executive Officer,
West Face Capital Inc.
(Investment manager)

John L. Bragg, O.C., LL.D, F.ICD
Chairman, President and
Co-Chief Executive Officer,
Oxford Frozen Foods Limited
(Food manufacturing)

Ronald G. Close
Corporate Director

The Honourable David L. Emerson
Corporate Director

Jean M. Fraser
Retired Partner,
Osler, Hoskins & Harcourt

Claude R. Lamoureux, O.C., F.ICD, ICD.D
Corporate Director

Michael H. McCain
President and Chief Executive Officer,
Maple Leaf Foods Inc.

James P. Olson
Corporate Director

ANNUAL REPORT | 2015 | MAPLE LEAF FOODS INC.

SENIOR MANAGEMENT AND OFFICERS

Committees of the
Board of Directors

Standing Committees

Audit Committee
W. Aziz, Chairman
J. Bragg
R. Close
C. Lamoureux
J. Olson

Corporate Governance Committee
W. Beattie, Chairman
G. Boland
R. Close
D. Emerson
J. Fraser

Environment, Health and
Safety Committee
J. Olson, Chairman
W. Beattie
J. Bragg
D. Emerson

Human Resources and
Compensation Committee
J. Fraser, Chair
W. Aziz
G. Boland
C. Lamoureux

Senior Leadership Team

Michael H. McCain
President and Chief Executive Officer

Ben Brooks
Senior Vice-President and General
Manager, Poultry

Rocco Cappuccitti
Senior Vice-President and
Corporate Secretary

Chris Compton
Senior Vice-President, Foodservice
Sales and Marketing

Curtis Frank
Senior Vice-President, Retail Sales

Adam Grogan
Senior Vice-President, Marketing
and Innovation

Ian Henry
Senior Vice-President, People

Randall Huffman
Senior Vice-President, Operations
and Chief Food Safety Officer

Lynda Kuhn
Senior Vice-President, Sustainability
and Public Affairs

Andreas Liris
Chief Information Officer

Gary Maksymetz
Chief Operating Officer

Rory McAlpine
Senior Vice-President, Government
and Industry Relations

Deborah Simpson
Chief Financial Officer

Iain Stewart
Senior Vice-President and
General Manager, Fresh Pork

Richard Young
Senior Vice-President, Supply
Chain and Purchasing

Other Corporate Officers

J. Nicholas Boland
Vice-President, Investor Relations

Stephen Elmer
Vice-President, Finance and Controller

Glen Gratton
Vice-President, Maple Leaf Agri-Farms

Michael Rawle
Vice-President, Finance and Treasurer

Dianne Singer
Assistant Corporate Secretary

2015 FINANCIAL
REVIEW

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

Management’s Discussion and Analysis
All dollar amounts are presented in Canadian dollars unless otherwise noted.

February 29, 2016

THE BUSINESS

Maple Leaf Foods Inc. ("Maple Leaf Foods" or the "Company") is a leading Canadian consumer protein company, making high
quality, innovative products under national brands including Maple Leaf®, Maple Leaf Prime®, Maple Leaf Natural
Selections®, Schneiders®, Schneiders Country Naturals® and Mina™. The Company employs approximately 11,500 people
across Canada and exports to global markets, including the U.S. and Asia. The Company is headquartered in Mississauga,
Ontario and its shares trade on the Toronto Stock Exchange (MFI).

DIVESTITURE OF CANADA BREAD COMPANY, LIMITED

On May 23, 2014, Grupo Bimbo, S.A.B. de C.V. of Mexico (“Grupo Bimbo”) acquired the 90.0% of issued and outstanding
shares of Canada Bread Company, Limited ("Canada Bread") owned by the Company, by way of a statutory plan of
arrangement under the Business Corporations Act (Ontario) (the “Arrangement”). The Company received gross proceeds of
approximately $1,657.0 million (which includes its share of the dividend paid upon closing of the Arrangement) for its 90.0%
interest in Canada Bread, resulting in a pre-tax gain of $997.0 million for the year ended December 31, 2014. Upon the sale of
the business, the net assets of Canada Bread have been derecognized.

OPERATING SEGMENTS

The Company’s results are organized into three segments: Meat Products Group, Agribusiness Group and Bakery Products
Group.

The Meat Products Group includes value-added prepared meats, lunch kits and snacks, and fresh pork and poultry products
sold under leading Canadian brands such as Maple Leaf®, Schneiders® and many leading regional brands.

The Agribusiness Group includes Canadian hog production operations that primarily supply the Meat Products Group with
livestock as well as toll feed sales.

The combination of the Company's Meat Products Group and Agribusiness Group comprises the Protein Group.

The Bakery Products Group was comprised of the Company's 90.0% ownership in Canada Bread, which has been classified
as discontinued operations following the announced sale of the Company's interest in Canada Bread in the first quarter of
2014. Refer to Note 22 of the Company's 2015 audited consolidated financial statements for further information.

FINANCIAL OVERVIEW

In 2015, sales from continuing operations increased 4.3% to $3,292.9 million from $3,157.2 million last year, or 2.4% after
adjusting for the impact of foreign exchange, due to higher sales in the Meat Products Group and an additional week in the
fourth quarter of 2015.
Adjusted Operating Earnings(i) for the year was $109.8 million compared to a loss of $75.5 million last year. Adjusted Earnings
per Share(ii) was $0.58 compared to a loss of $0.56 last year. These improvements were largely a result of improved margins
in the Meat Products Group.

Net earnings from continuing operations for the year was $41.6 million ($0.30 per basic share attributable to common
shareholders(iii)) compared to a loss of $213.8 million (loss of $1.51 per share) last year. This included $33.8 million ($0.18 per
share) of restructuring and other related costs (2014: $67.6 million, or $0.36 per share). The improvement was due primarily to
improved margins in the Meat Products Group, non-recurring financing costs that were incurred last year in relation to the
repayment of the Company's outstanding debt and lower restructuring and other related costs.

Several items are excluded from the discussions of underlying earnings performance as they are not representative of ongoing
operational activities. Refer to the section entitled Non-IFRS Financial Measures of this Management Discussion and Analysis
on page 27 for a description and reconciliation of all non-IFRS financial measures.

Notes:
(i) Adjusted Operating Earnings, a non-IFRS measure, is used by Management to evaluate financial operating results. It is
defined as earnings from continuing operations adjusted for items that are not considered representative of ongoing
operational activities of the business, and items where the economic impact of the transactions will be reflected in
earnings in future periods when the underlying asset is sold or transferred. Please refer to the section entitled Non-IFRS
Financial Measures starting on page 27 of this document.

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

(ii) Adjusted Earnings per Share, a non-IFRS measure, is used by Management to evaluate financial operating results. It is
defined as basic earnings per share from continuing operations attributable to common shareholders, and is adjusted on
the same basis as Adjusted Operating Earnings. Please refer to the section entitled Non-IFRS Financial Measures starting
on page 27 of this document.

(iii) Unless otherwise stated, all per share amounts are presented as per basic share attributable to common shareholders.

SELECTED FINANCIAL INFORMATION

The following table summarizes selected financial information for the three years ended December 31:

($ millions except earnings per share)

Sales
Adjusted Operating Earnings(iii)
Adjusted EBITDA(iv)
Adjusted EBITDA %(iii)
Net earnings (loss) from continuing operations
Adjusted Earnings per Share(iii)
Basic earnings per share from continuing operations

Diluted earnings per share from continuing operations
Total assets(v)
Net Cash (Debt)(iii)(v)
Total long-term liabilities(v)
Return on Net Assets ("RONA")(iii)(v)
Cash provided (used) by operating activities(v)
Cash dividends per share

2015

$ 3,292.9

109.8

219.8

6.7%

41.6

0.58

0.30

0.29

2014(i)
$ 3,157.2

(75.5)

14.8

0.5%

2013(ii)

$ 2,954.8

$ (136.5)

(48.7)

(1.6%)

$ (213.8)

$ (141.4)

(0.56)

(1.51)

(1.08)

(1.01)

$ 2,630.9

$ 2,876.5

$ 3,599.1

281.6

248.6

4.8%

159.4

0.32

485.8

244.8

(3.7%)

$ (362.2)

0.16

$ (451.7)

990.6

(0.2%)

260.1

0.16

(i)

2014 figures exclude the results of the Bakery Products Group, which are reported as discontinued operations. Refer to
Note 22 of the Company's 2015 audited consolidated financial statements.

(ii) Unless otherwise noted, 2013 figures have been restated for the classification the Bakery Products Group as discontinued

operations. Refer to Note 22 of the Company's 2015 audited consolidated financial statements.
(iii) Refer to the section entitled Non-IFRS Financial Measures starting on page 27 of this document.
(iv) Adjusted EBITDA is calculated as earnings from continuing operations before interest and income taxes plus depreciation

and intangible asset amortization, adjusted for items that are not considered representative of ongoing operational
activities of the business, and items where the economic impact of the transactions will be reflected in earnings in future
periods when the underlying asset is sold or transferred. Please refer to the section entitled Non-IFRS Financial Measures
starting on page 27 of this document.

(v) 2013 balance sheet figures have not been restated for the classification of Rothsay By-Product Recycling ("Rothsay") and
the Bakery Products Group as discontinued operations. Refer to Note 22 of the Company's 2015 audited consolidated
financial statements.

DISCUSSION OF FACTORS IMPACTING THE COMPANY'S OPERATIONS AND RESULTS

Value Creation Plan

In September 2010, the Board of Directors of Maple Leaf Foods approved a comprehensive Value Creation Plan ("the Plan")
designed to significantly increase profitability and competitiveness through cost reduction and productivity enhancement. The
Company has executed against the Plan over the last five years by reducing product complexity, closing less efficient
manufacturing and distribution operations and consolidating production and distribution into a smaller number of efficient scale
facilities. The Plan is substantially complete. The only remaining element is to optimize the operations and eliminate ramp-up
inefficiencies, primarily at the new prepared meats facility in Hamilton, Ontario.

The Company successfully closed its two remaining legacy facilities in the first half of 2015. Since its inception, the Plan has
included the construction of a new 400,000 square foot prepared meats processing facility, the consolidation of 17 distribution
centres into two, the closure of eight legacy manufacturing plants, and expansion of three others.

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

The Company has standardized product formulations, sizes and specifications and eliminated lower volume, lower value
product lines in its prepared meats business. It has largely converted its enterprise resource planning software to SAP,
replacing a number of legacy systems into one platform that provides increased controls and capabilities.

The Company has begun to realize savings from multiple sources across the organization, including:

•

Enhanced throughput and productivity from larger scale and new technologies,

Lower total overhead and reduced direct labour,

Improved product yield, reduced waste and better packaging, and

Reduced distribution costs.

It is anticipated that the elimination of the ramp-up inefficiencies in 2016 will enable the Company to achieve its target of a run-
rate Adjusted EBITDA margin of 10.0% sometime in the course of 2016.

Capital Investment Plan

During 2014, estimates of capital investments in the Plan were revised to be approximately $710.0 million in aggregate
between 2010 and 2015. This estimate included $620.0 million supporting the Company's prepared meats network and $90.0
million to implement SAP, both of which are substantially completed as of December 31, 2015 and in line with this cost
estimate.

Sustainability

In 2015, the Company launched a comprehensive sustainability strategy focused on advancement in four areas: nutrition and
health, people and communities, animal care and environmental sustainability. The Company's goal is to deeply embed
sustainability into how it operates and to create business value through addressing social and environmental issues. As people
increasingly focus on what is in their food and how it is produced, there is significant opportunity in building leadership in
sustainable protein by producing more natural, nutritious foods; lending our voice and resources to address the critical issue of
food insecurity; implementing a strong animal care program; and reducing our environmental footprint. The Company reports
on its progress against its sustainability goals using the Global Reporting Initiative (GRI) Standards for Sustainability Reporting
and posts an annual report to its sustainability website (www.mapleleafsustainability.ca). This website is also regularly updated
with other developments.

Maple Leaf Food’s Sustainability Priorities

The Company has defined four sustainability priorities and areas of focus:

Advance Nutrition and Health

There is significant commercial and social benefit to advancing the nutrition and health benefits of the Company’s products.
Maple Leaf Foods continues to advance the use of simpler, natural ingredients, reducing or eliminating antibiotic use in animal
production, and reducing sodium levels to meet Health Canada guidelines. A comprehensive analysis of product ingredients is
underway in order to develop a comprehensive plan to advance nutrition across the portfolio.

Value its People and Communities

The Company values a strong culture that keeps people safe, rewards excellence and empowers employees to learn and
contribute their best. This includes a robust workplace safety program, which has driven continuous material reductions in
workplace accidents. The Company is committed to being a destination for top talent, supported by leadership and career
development, training and developing a formalized diversity and inclusion strategy. The Company is also increasing its
engagement in responding to the critical national and global issue of hunger, through a comprehensive community
involvement program that will advance sustainable food security.

Treat Animals Well

In 2015, the Company launched a formal Animal Care Commitment that articulates the principles, goals and actions it will take
to become a leader in animal care. This includes advancing a culture of animal care through communications, education and
training; robust policies and procedures; regular reporting of performance and conducting frequent, rigorous internal and
independent audits; advancing practices and technologies based on sound science; and providing clear, fact-based
communication of goals, performance and progress.

Eliminate Waste

The Company is committed to reducing its environmental footprint by 50% by 2025, encompassing the three areas where the
Company has the largest environmental impact: climate change, water usage and waste reduction. Utility, water and waste
audits were initiated in 2015 and will be completed in 2016. The Company is identifying opportunities to advance
environmental goals in these three areas. The Company will be implementing environmental sustainability action plans
commencing in 2016.

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

Fluctuating Input Prices

The following table outlines the change in key commodity prices that affected the Company’s business and financial results:

(Unaudited)
Pork cutout (US$ per cwt)(i)(ii)
Hog market price per cwt (US$ per cwt)(i)(ii)
Hog market price per cwt (CAD per cwt)(i)(ii)
Poultry meat market price (CAD per kg)(iii)
Poultry live bird cost (CAD per kg)(iii)
Corn (US$ per bushel)(iv)
Soybeans (US$ per bushel)(iv)
Oil (US$ per barrel)(iv)

As at
December
31, 2015

$ 69.51

$ 53.03

$ 73.39

3.61

1.56

3.59

8.71

2015

$ 79.13

$ 70.59

$ 90.28

3.71

1.56

3.81

9.44

$ 37.13

$ 48.66

Annual Averages

2014

Change

2013

$ 110.20

$ 105.14

$ 116.14

3.58

1.61

4.18

12.46

93.26

(28.2%)

(32.9%)

(22.3%)

3.6%

(3.1%)

(8.9%)

(24.2%)

(47.8%)

$ 92.86

$ 89.64

$ 92.33

3.51

1.69

5.80

$ 14.06

$ 97.91

(i) As at December 31, 2015, rate based on spot prices for the week ended January 2, 2016 based on CME (Source: USDA).
(ii) Annual averages based on five-day average on CME (Source: USDA).
(iii) Market price (Source: Express Market Inc.) and Live Cost (Source: Chicken Farmers of Ontario).
(iv) Daily close prices (Sources: Bloomberg, CME, Thomson Reuters).

In 2015, U.S. hog supplies rebounded from the impacts of the Porcine Epidemic Diarrhea ("PED") virus, resulting in an
increase in hog production and a significant decline in hog market prices, which was offset by a weakening Canadian dollar.
Feed grain prices declined slightly compared to last year, however the weakening Canadian dollar increased prices within
Canada. Overall the negative impacts of decreased hog market prices and increased feed costs on earnings in the hog
production business were largely offset by favourable impacts of commodity hedging programs.

Industry primary pork processing margins, the spread between pork cutout and hog market prices, improved significantly over
last year, exceeding the five-year average margin of $5.80 USD per cwt. This increase was largely attributable to a material
spike in pork belly prices during the second half of 2015. The benefit experienced in fresh pork was mostly offset by increased
input costs in prepared meats.

The Company uses derivatives and other non-derivative financial instruments to manage its exposures to fluctuations in
commodity prices.

Impact of Currency

The following table outlines the changes in currency rates that have affected the Company’s business and financial results:

U.S. dollar / Canadian dollar(i)
Canadian dollar / Japanese yen(i)

(i) Source: Bank of Canada daily noon rates

As at
December
31, 2015
$ 1.38

¥ 86.88

2015

$ 1.28

¥ 94.66

Annual Averages

2014

Change

$ 1.10

¥ 95.63

16.4 %

(1.0)%

2013

$ 1.03

¥ 94.64

The Canadian dollar weakened relative to the U.S. dollar by 16.4% in 2015. In the short-term, a weaker Canadian dollar
expands export margins in the Company’s primary pork processing and hog production operations. Conversely, a weaker
Canadian dollar increases the cost of raw materials and ingredients in the domestic prepared meats business. The prepared
meats business is able to react to changes in input costs through pricing, cost reduction or investment in value-added
products. Over the longer-term, a weaker Canadian dollar increases the relative competitiveness of the domestic Canadian
packaged goods operation, as imports of competing products from the U.S. become less competitive. Similarly, the Company
also has a greater ability to export and expand into the U.S. market.

During 2015, the Japanese yen increased in value relative to the Canadian dollar by 1.0%, which did not have a material
impact on earnings. In general, an increase in the Japanese yen strengthens export margins to Japan in the Company’s fresh
pork business. The Company ultimately seeks to manage pricing to offset the impact of currency fluctuations.

The Company uses derivatives and other non-derivative financial instruments to manage its exposures to fluctuations in
foreign exchange rates.

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

OPERATING REVIEW

The following table summarizes sales by business segment for the two years ended December 31:

($ millions)

Meat Products Group
Agribusiness Group
Total Sales(i)

2015(iii)
$ 3,277.0

15.9
$ 3,292.9

2014(iii)
$ 3,135.4

21.9
$ 3,157.2

Change

4.5%

(27.1%)

4.3%

The following table summarizes Adjusted Operating Earnings by business segment for the two years ended December 31:

($ millions)

Meat Products Group
Agribusiness Group

Protein Group
Non-Allocated Costs in Adjusted Operating Earnings(ii)
Adjusted Operating Earnings(i)

2015(iii)
$ 108.4

1.4

2014(iii)
$ (80.4)

8.6

Change

$ 188.8

(7.3)

$ 109.8

$ (71.7)

$ 181.5

—

(3.7)

3.7

$ 109.8

$ (75.5)

$ 185.3

(i)

2014 figures exclude the results of the Bakery Products Group, which are reported as discontinued operations. Refer to
Note 22 of the Company's 2015 audited consolidated financial statements.

(ii) Non-allocated costs are comprised of expenses not separately identifiable to business segment groups, and do not form

part of the measures used by the Company when assessing the segments’ operating results.

(iii) May not add due to rounding.

Meat Products Group

Includes value-added prepared meats, lunch kits and snacks, and fresh pork and poultry products sold under leading
Canadian brands such as Maple Leaf®, Schneiders® and many leading regional brands.

Sales in the Meat Products Group for 2015 increased 4.5% to $3,277.0 million, or 2.6% after adjusting for the weaker
Canadian dollar. Higher sales resulted from increased volume in fresh pork and poultry, pricing in prepared meats that was
implemented in the second quarter of 2014, a favourable sales mix in fresh poultry and an extra week in the fourth quarter of
2015. This increase was partially offset by lower selling prices for fresh pork and a slight decline in prepared meats volume.

Adjusted Operating Earnings for 2015 increased to $108.4 million compared to a loss of $80.4 million last year. Earnings in
prepared meats benefited from pricing, an improved sales mix, lower overall raw material costs and lower operating costs in
the new prepared meats plant network. The Company benefited from the flow through of pricing implemented in the second
quarter of 2014 to offset the impact of higher raw material costs driven by the outbreak of the PED virus in U.S. hog production
herds. Although on average raw material costs returned to more normalized levels, this decrease was largely offset by the
impact of a lower Canadian dollar on the Company's prepared meats business. Lower operating costs resulted primarily from a
reduction of duplicative overhead costs, as the Company closed its two remaining legacy plants in the first half of 2015,
eliminating the final components of its duplicative supply chain. In addition, during the second half of 2015 the Company
continued to make progress in reducing ramp-up inefficiencies in its plant network, primarily at the new prepared meats facility
in Hamilton, Ontario.

Fresh pork earnings increased largely as a result of increased volume and improved Canadian retail and export margins.
Industry pork processing margins improved significantly over the same period last year, when they were below the five year
average, however the benefit of higher prices was partially offset by declining by-product values. Fresh poultry earnings
increased as a result of higher volume, improved poultry processing margins, an improved sales mix resulting from increased
retail branded volume and increased operating efficiencies.

Agribusiness Group

Includes Canadian hog production operations that primarily supply the Meat Products Group with livestock as well as toll feed
sales.

Agribusiness Group sales in 2015 were $15.9 million compared to $21.9 million last year, due to lower external sales volume
for feed.

Adjusted Operating Earnings in 2015 decreased to $1.4 million from $8.6 million last year, as a result of a substantial decline
in hog prices in the second half of 2015, which was not fully offset by the Company's risk management program and the
benefit of a lower Canadian dollar. Also negatively impacting earnings was an increase in feed grain prices as a result of the

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

weaker Canadian dollar. Increased operating costs were incurred in relation to the ongoing conversion of existing sow barns to
loose housing, supporting the Company's animal care program. This was offset by lower costs relating to the prevention of the
PED virus.

Non-allocated Costs

Non-allocated amounts that are excluded from Adjusted Operating Earnings in 2015 comprise of a $12.8 million loss due to
changes in the fair value of biological assets (2014: gain of $0.5 million) and a $3.9 million unrealized loss on futures contracts
(2014: gain of $4.1 million). In 2014, an $8.7 million expense related to the modification of a long-term incentive compensation
plan was excluded from Adjusted Operating Earnings, as described in Note 24 of the Company's 2015 audited consolidated
financial statements.

There were no non-allocated costs included in Adjusted Operating Earnings in 2015. In 2014, expenses of $3.7 million were
included in Adjusted Operating Earnings and related to corporate costs that were not allocated to any reportable segment.

The changes in the fair value of biological assets and unrealized (gains) losses on futures contracts have been excluded from
Adjusted Operating Earnings, as the economic impact of these transactions will be reflected in earnings in future periods when
the underlying asset is sold or transferred. The cost associated with the modification of the long-term incentive plan was
excluded from Adjusted Operating Earnings, as this was a decision made as a result of the sale of the Company’s interest in
Canada Bread, and is not considered representative of ongoing operational activities of the business.

DISCONTINUED OPERATIONS

Sales from discontinued operations for the year ended December 31, 2014 were $567.9 million relating to Canada Bread. Net
earnings from discontinued operations for the year ended December 31, 2014 was $925.7 million. This included $931.3 million
in earnings from Canada Bread and residual expenses relating to the divestitures of the Olivieri Fresh Pasta and Sauce and
Rothsay businesses.

For additional information on discontinued operations please see Note 22 of the Company's 2015 audited consolidated
financial statements.

GROSS MARGIN

Gross margin in 2015 was $381.1 million (11.6% of sales) compared to $218.3 million (6.9% of sales) last year. The increase
in gross margin as a percentage of sales is largely attributable to margin improvement in the Meat Products group. Prepared
meats benefited from pricing, lower raw material costs and lower operating costs in its new plant network, which were partially
offset by the impact of a lower Canadian dollar and a slight decline in volume. Fresh pork benefited from increased volume
and higher margins for export and Canadian retail sales, partially offset by lower selling prices for fresh pork. Fresh poultry
benefited from increased volume and a favourable sales mix, driven by increased retail branded volume. Also included in
gross margin was a $13.3 million decrease in the fair value of biological assets and an $8.0 million decrease in the fair value of
unrealized mark-to-market commodity contracts.

The changes in the fair value of biological assets and unrealized and realized (gains) losses on futures contracts have been
excluded from Adjusted Operating Earnings, as the economic impact of the transactions will be reflected in earnings in future
periods when the underlying asset is sold or transferred.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE

During the year, selling, general and administrative expense decreased by 3.3% to $288.1 million (8.7% of sales), compared to
$297.9 million (9.4% of sales) last year. The decrease is largely due to a non-recurring $8.7 million expense related to the
modification of a long-term incentive compensation plan recorded in 2014, as described in Note 24 of the of the Company's
2015 audited consolidated financial statements. The cost associated with the modification of the long-term incentive plan was
excluded from Adjusted Operating Earnings as this was a decision made as a result of the then planned sale of the Company’s
interest in Canada Bread, and was therefore not considered representative of ongoing operational activities of the business.

In 2015, the Company enhanced its efforts in streamlining the organization and reducing non-strategic costs, which included
the reduction of over 400 salaried positions, with a majority being completed late in the fourth quarter and the remainder
continuing in 2016, along with other cost reductions. The Company expects to continue its focus on organizational efficiencies
to maintain a highly competitive cost structure and support a renewed focus on growth. The Company's goal is to minimize the
cost of running the business so it can focus its investments on growing the business.

OTHER INCOME (EXPENSE)

Other expense for 2015 was $1.9 million (2014: expense of $16.8 million) and primarily included a depreciation charge on
assets servicing divested businesses, partially offset by a gain on sale of investment properties. Other expense in 2014 largely
comprised of a depreciation charge on assets servicing divested businesses.

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

Certain items in other income (expense) are excluded from the calculation of Adjusted EBITDA and Adjusted Earnings per
Share as they are not considered representative of ongoing operational activities of the business. Other income (expense)
used in the calculation of Adjusted EBITDA and Adjusted Earnings per Share for 2015 is income of $1.2 million (2014: expense
of $1.6 million).

RESTRUCTURING AND OTHER RELATED COSTS

Restructuring and other related costs for 2015 were $33.8 million compared to $67.6 million last year. The Meats Products
Group incurred $15.3 million (2014: $37.2 million) in restructuring and other related costs. Of this amount, $8.7 million (2014:
$21.4 million) related to asset impairment and accelerated depreciation, $2.4 million (2014: $12.8 million) related to severance
and other employee costs and $4.2 million (2014: $3.0 million) related to site closing costs.

The balance of restructuring costs for 2015 and 2014 related primarily to severance and other employee costs that were
incurred in connection with other ongoing management and organizational structure restructuring initiatives.

INTEREST EXPENSE AND OTHER FINANCING COSTS

Interest expense and other financing costs for 2015 were $4.7 million compared to $126.9 million last year. The decrease was
mainly due to lower debt levels and nonrecurring financing costs of $98.6 million related to the repayment of the Company's
outstanding debt in the second quarter of 2014.

INCOME TAXES

The Company’s income tax expense relating to continuing operations for 2015 resulted in an effective tax rate of 21.0% (2014:
25.9% tax recovery). The lower effective tax rate in 2015 is primarily the result of a favourable resolution of an income tax
audit. The effective tax rate excluding this item is 26.6%. For 2015, the effective tax recovery rate on restructuring charges
used in the computation of Adjusted Earnings per Share is 26.0% (2014: 25.2%). The effective tax recovery rate on items not
considered representative of continuing operations in 2015 was 26.5% (2014: 27.0%).

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

TRANSACTIONS WITH RELATED PARTIES

The Company had a 90.0% controlling interest in Canada Bread, a publicly traded subsidiary that was consolidated into the
Company’s results and presented as a discontinued operation, until its sale in May 2014. Transactions between the Company
and its consolidated entities have been eliminated in the Company's 2015 audited consolidated financial statements.
Subsequent to the sale of this controlling interest, Canada Bread ceased to be a related party of the Company and the
Company is no longer consolidating the results and the related balance sheet of Canada Bread, as discussed in Note 22 of the
Company's 2015 audited consolidated financial statements.

The Company sponsors a number of defined benefit and defined contribution plans. During the year ended December 31,
2015, the Company received $0.0 million (2014: $0.7 million) from the defined benefit pension plans for reimbursement of
expenses incurred by the Company to provide services to these plans. During the year ended December 31, 2015, the
Company's contributions to these plans were $9.6 million (2014: $21.3 million, which includes $3.7 million made by Canada
Bread, which has been presented as discontinued operations).

Key management personnel are those persons having authority and responsibility for planning, directing, and controlling the
activities of the Company and/or its subsidiary, directly or indirectly, including any external director of the Company and/or its
subsidiary.

Remuneration of key management personnel of the Company is comprised of the following expenses:

Short-term employee benefits

Salaries, bonuses, and fees

Company car allowances

Other benefits

Total short-term employee benefits

Severance benefits(ii)
Post-employment benefits

Share-based compensation

Total remuneration

2015

2014(i)

$ 7,052

$ 12,350

274

256

298

183

$ 7,582

$ 12,831

476

782

8,811

14,193

946

25,076

$ 17,651

$ 53,046

(i)

(ii)

Includes remuneration of Canada Bread key management personnel until the sale of Canada Bread on May 23, 2014.
The 2014 balance includes $5.6 million of share-based compensation.

During the year ended December 31, 2015, key management personnel of the Company exercised 0.1 million (2014: 1.3
million) share options granted under the Maple Leaf Foods Share Incentive Plan for an amount of $1.7 million (2014: $15.5
million).

The Company’s largest shareholder is McCain Capital Inc. (“MCI”) which is beneficially owned and controlled by Mr. Michael
H. McCain, Chief Executive Officer and President of the Company. For the year ended December 31, 2015, the Company
incurred expenses of $0.4 million, which represents the market value of the transactions with MCI. As at December 31, 2015,
$0.0 million was owing to MCI relating to these transactions.

During the year ended December 31, 2015, the Company agreed to sublease office space to McCain Financial Advisory
Services ("MFAS"), an entity jointly controlled by Mr. Michael H. McCain, for cost equal to the amount that the Company is
obligated to pay under its lease. For the year ended December 31, 2015, the Company recorded $0.1 million of sublease
income from MFAS and as at December 31, 2015, $0.1 million was owing from MFAS.

ACQUISITIONS AND DIVESTITURES

There were no acquisitions or divestitures relating to continuing operations during the years ended December 31, 2015 and
2014.

CAPITAL RESOURCES

The consumer packaged meats industry in which the Company operates is generally characterized by high sales volume and
high turnover of inventories and accounts receivable. In general, accounts receivable and inventories are readily convertible
into cash. Investment in working capital is affected by fluctuations in the price of raw materials, seasonal and other market-
related fluctuations. The Company has in the past consistently generated a strong base level of operating cash flow, even in
periods of higher commodity prices and restructuring of its operations. These operating cash flows provide a base of

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

underlying liquidity that the Company supplements with credit facilities and cash on hand to provide longer-term funding and to
finance fluctuations in working capital levels.

On February 3, 2015, the Company amended its existing $200.0 million committed credit facility by extending the maturity date
of the facility to June 30, 2016 under similar terms and conditions using the same syndicate of Canadian, U.S., and
international institutions. The committed facility is unsecured and bears interest based on short-term interest rates. The facility
is intended to meet the Company’s funding requirements for general corporate purposes and to provide appropriate levels of
liquidity. As at December 31, 2015, the Company had drawn letters of credit of $60.3 million (2014: $21.6 million) on this
facility.

On August 6, 2014, the Company entered a new uncommitted credit facility for issuing up to a maximum of $120.0 million of
letters of credit. As at December 31, 2015, $79.4 million (2014: $82.3 million) of letters of credit had been issued thereon.
These letters of credit have been collateralized with cash, as further described in Note 4 of the Company’s 2015 audited
consolidated financial statements.

The Company's cash balance as at December 31, 2015 is $292.3 million (2014: $496.3 million). The Company has invested in
short-term deposits in Canadian financial institutions with long-term debt ratings of A or higher.

To access competitively priced financing and to further diversify its funding sources, the Company operates accounts
receivable securitization facilities, under which it has sold certain accounts receivable, with very limited recourse, to an entity
owned by an international financial institution with a long-term AA- debt rating. The receivables are sold at a discount to face
value based on prevailing money market rates. At the end of 2015, the Company had $192.6 million (2014: $156.6 million) of
trade accounts receivable serviced under these facilities. In return for the sale of these receivables, the Company will receive
cash of $88.9 million (2014: $46.4 million) and notes receivable in the amount of $103.7 million (2014: $110.2 million). Due to
the timing of receipts and disbursements, the Company may, from time to time, record a receivable or payable related to the
securitization facility, and as at December 31, 2015, this net payable amounted to $2.9 million (2014: $30.4 million net
payable). The maximum cash advance available to the Company under this program is $110.0 million. These facilities were
accounted for as an off-balance sheet transaction in accordance with International Financial Reporting Standards (“IFRS”) and
will expire in September 2016.

The Company's securitization and other credit facilities are subject to certain restrictions, including the maintenance of
covenants. The Company was in compliance with all of the requirements of these facilities during 2015. If the securitization
was to be terminated, the Company would recognize the related amounts on the consolidated balance sheet and consider
alternative financing if required.

CAPITAL EXPENDITURES

Capital expenditures for 2015 were $145.8 million compared to $233.8 million, or $216.0 million excluding discontinued
operations, in 2014 and compared to the Company's estimate of $120.0 million at the beginning of the year. The increase over
the Company's original estimate for 2015 was due to spending on a number of smaller scale incremental profit enhancement
projects in the Meat Products Group. The reduction in spending from 2014 is related to lower investments in the meat
processing facility in Hamilton, Ontario.

The Company currently estimates its capital expenditures for the full year of 2016 will be approximately $175.0 million. This
estimate includes the Company's expectation that it will spend its depreciation rate on improving and maintaining its plant
network. Included in the 2016 estimate is approximately $65.0 million relating to profit enhancement projects, primarily
consisting of investments to optimize fresh pork packaging capabilities and the prepared meats bacon facility.

NORMAL COURSE ISSUER BID

On March 23, 2015 the Toronto Stock Exchange ("TSX") accepted the Company's notice of intention to commence a new
Normal Course Issuer Bid ("NCIB"), which allowed the Company to repurchase, at its discretion, up to approximately 8.65
million common shares in the open market or as otherwise permitted by the TSX, subject to the normal terms and limitations of
such bids. Common shares purchased by the Company are canceled. The program commenced on March 25, 2015 and was
terminated subsequent to year end, on January 22, 2016, as the Company completed its purchase and cancellation of 8.65
million common shares for $194.5 million at a volume weighted average price paid of $22.48 per common share. During the
year ended December 31, 2015, 8.14 million shares were purchased for cancellation for $182.5 million at a volume weighted
average price paid of $22.44 per common share.

CASH FLOW AND FINANCING

Net cash, a non-IFRS measure as described on page 30, was $281.6 million at the end of 2015, compared to $485.8 million in
2014. The decrease in cash for the year ended December 31, 2015 is largely due to share repurchases under the NCIB
program, investments in property and equipment and increased dividend payments, partially offset by increased cash flow
from operations.

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

Cash Flow from Operating Activities

Cash provided by operations for 2015 was $159.4 million compared to cash used in operations of $362.2 million in 2014. The
improvement in cash flow from operations was primarily due to higher earnings from operations, a lower investment in working
capital and non-recurring one time payments related to the repayment of Company's senior notes in the second quarter of
2014.

Cash Flow from Financing Activities

Cash used in financing activities was $224.6 million for 2015 compared to $973.7 million in 2014. Cash used in 2015 primarily
related to share repurchases under the NCIB program of $182.5 million and dividend payments of $44.7 million. The Company
doubled its annual dividend to $0.32 per voting common share compared to $0.16 last year. Cash used in 2014 primarily
related to the repayment of the Company's senior notes and outstanding balance on the credit facility and dividend payments,
partially offset by exercised stock options.

Cash Flow from Investing Activities

Cash used in investing activities was $138.9 million for 2015 compared to cash provided of $1,330.0 million in 2014. Cash
used in 2015 primarily related to capital expenditures. Cash provided in 2014 primarily related to proceeds received from the
Canada Bread sale of $1,647.0 million, partially offset by associated transaction costs and capital expenditures relating mainly
to the construction of the new prepared meats facility in Hamilton, Ontario.

CONTRACTUAL OBLIGATIONS

The following table provides information about certain of the Company's significant contractual obligations as at December 31,
2015. This table presents the undiscounted principal cash flows payable in respect of financial liabilities.

Payments due by fiscal year:

($ thousands)

Financial liabilities

Accounts payable and accruals
Long-term debt(i)
Foreign exchange contracts

Commodity futures contracts
Interest rate swaps(i)
Other liabilities

Due within
1 year

Due between
1 and 2 years

Due between
2 and 3 years

Due after
3 years

Total

$ 256,473

—

$ 256,473

1,040

9,135

1,123

4,661

2,683

6,318

14,301

$ 285,559

—

6,480

1,196

8,716

—

849

—

2,157

12,338

4,661

2,683

12,798

18,503

1,889

$ 11,292

$ 307,456

Commitments

Contractual obligations including operating
leases
Total

63,957

43,957

33,721

128,674

270,309

$ 349,516

$ 52,673

$ 35,610

$ 139,966

$ 577,765

(i) Does not include contractual interest payments

Management is of the opinion that its cash flow, cash on hand, and sources of financing provide the Company with sufficient
resources to finance ongoing business requirements and its planned capital expenditure program for at least the next 12
months. Additional details concerning financing are set out in Note 13 and Note 18 of the Company's 2015 audited
consolidated financial statements.

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT ACTIVITIES

Through the normal course of business the Company is exposed to financial and market risks that have the potential to affect
its operating results. In order to manage these risks, the Company operates under risk management policies and guidelines
which govern the hedging of price and market risk in the foreign exchange, interest rate, and commodity markets, as well as
funding and investing activities.

The Company engages in hedging to manage price and market risk associated with core operating exposures and does not
engage in significant trading activity of a speculative nature.

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

The Company’s Risk Management Committee meets frequently to discuss current market conditions, review current hedging
programs and trading activity, and approve any new hedging or trading strategies.

Financial Instruments

The Company’s financial assets and liabilities are classified into the following categories:

Cash and cash equivalents

Accounts receivable

Notes receivable

Bank indebtedness

Accounts payable and accrued liabilities

Long-term debt
Derivative instruments(i)

Held for trading

Loans and receivables

Other financial liabilities

Held for trading

(i) These derivative instruments may be designated as cash flow hedges or as fair value hedges as appropriate.

The Company applies hedge accounting and uses derivatives and other non-derivative financial instruments to manage its
exposures to fluctuations in foreign exchange rates and commodity prices.

The fair values and notional amounts of derivative financial instruments as at December 31 are shown below:

($ thousands)

Cash flow hedges

Foreign exchange contracts(ii)
Commodity contracts(ii)

Fair value hedges
Commodity contracts(ii)
Derivatives not designated in a

formal hedging relationship

Interest rate swaps
Foreign exchange contracts(ii)
Commodity contracts(ii)

Total fair value
Current(iii)
Non-current

Total fair value

2015

2014

Notional
amount(i)

Fair value

Asset

Liability

Notional
amount(i)

Fair value

Asset

Liability

$ 101,768

258

$ 3,740

$ 159,032

340

$ 2,964

16,292

—

457

10,879

1,339

40,128

$ 1,746

— $

7,990

824

—

$ 520,000

$ 5,078

$ 12,798

$ 1,180,000

— $ 12,488

161,456

197,205

2,587

3,119

921

2,226

147,489

414,948

$ 12,788

$ 20,142

$ 10,265

$ 13,662

2,523

6,480

$ 12,788

$ 20,142

439

11,687

6,223

$ 14,629

$ 21,680

$ 14,629

$ 13,932

—

7,748

$ 14,629

$ 21,680

(i) Unless otherwise stated, notional amounts are stated at the contractual Canadian dollar equivalent.
(ii) Derivatives are short-term and will impact profit or loss at various dates within the next 12 months.
(iii) As at December 31, 2015, the above fair value of current assets has been reduced on the consolidated balance sheet by

an amount of $1.6 million, which represents the excess of the fair market value of exchange traded commodities
contracts over the initial margin requirements. The excess or deficit in maintenance margin requirements with the futures
exchange is net settled in cash each day and is therefore presented as cash and cash equivalents.

The fair value of financial assets and liabilities classified as loans and receivables and other financial liabilities (excluding long-
term debt) approximate their carrying value due to their short-term nature.

The carrying value of long-term debt as at December 31, 2015 and 2014 approximates its fair value. The fair value of the
Company’s long-term debt has been classified as Level 2 in the fair value hierarchy and was estimated based on discounted
future cash flows using current rates for similar financial instruments subject to similar risks and maturities.

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

rates and foreign exchange rates. Commodity futures and commodity options contracts are exchange-traded and over-the-
counter. Fair value is determined based on exchange prices and other observable market data.

Derivatives not designated in a formal hedging relationship are classified as held-for-trading. Net gains and losses on financial
instruments held-for-trading consist of realized and unrealized gains and losses on derivatives that were de-designated or
were otherwise not in a formal hedging relationship.

For the year ended December 31, 2015, the Company recorded a gain of $32.4 million (2014: loss of $27.9 million) on
financial instruments held for trading. The gain was mainly attributed to a gain in commodity exchange traded contracts which
hedge and offset price risk volatility inherent in the hog operational business.

For the year ended December 31, 2015, the pre-tax amount of hedge ineffectiveness recognized in other income was a gain of
$0.1 million (2014: loss of $0.2 million).

The table below sets out fair value measurements of financial instruments using the fair value hierarchy as at December 31,
2015:

($ thousands)

Assets:

Foreign exchange contracts

Commodity contracts

Interest rate swaps

Liabilities:

Foreign exchange contracts

Commodity contracts

Interest rate swaps

Level 1

Level 2

Level 3

Total

—

$ 2,845

4,865

—

5,078

$ 4,865

$ 7,923

—

457

—

$ 4,661

2,226

12,798

457

$ 19,685

—

$ 2,845

4,865

5,078

$ 12,788

$ 4,661

2,683

12,798

$ 20,142

There were no transfers between levels for the year ended December 31, 2015. Determination of fair value and the resulting
hierarchy requires the use of observable market data whenever available. The classification of a financial instrument in the
hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. For financial instruments
that are recognized at fair value on a recurring basis, the Company determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorization at the end of each reporting period.

Capital

The Company’s objective is to maintain a cost effective capital structure that supports its long-term growth strategy and
maximizes operating flexibility. In allocating capital to investments to support its earnings goals, the Company establishes
internal hurdle return rates for capital initiatives. Capital projects are generally financed with internal cash flows and senior
debt where required.

The Company typically uses leverage in its capital structure to reduce the cost of capital. The Company’s goal is to maintain its
primary credit ratios and leverage at levels that are designed to provide continued access to investment-grade credit pricing
and terms. The Company measures its credit profile using a number of metrics, some of which are non-IFRS measures,
primarily Net Cash (Debt) to EBITDA, and interest coverage. Refer to the section entitled Non-IFRS Financial Measures
starting on page 27 of this document for more information on the non-IFRS measures.

In addition to senior debt, credit facilities, and equity, the Company uses leases and very limited recourse accounts receivable
securitization programs as additional sources of financing.

The Company has maintained a stable dividend distribution that is based on a long-term sustainable net earnings base. From
time to time, the Company has purchased shares for cancellation pursuant to normal course issuer bids and to satisfy awards
under its Share Incentive Plan.

Credit Risk

Credit risk refers to the risk of losses due to failure of the Company’s customers and counterparties to meet their payment
obligations.

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

due and maintains an allowance for doubtful accounts relating to specific losses estimated on individual exposures as
described in Note 5 of the Company's 2015 audited consolidated financial statements. Average accounts receivable days
sales outstanding for the year is consistent with historic trends.

Management believes concentrations of credit risk with respect to accounts receivable is limited due to the generally high
credit quality of the Company’s major customers, the large number and geographic dispersion of smaller customers, and the
operation of the accounts receivable securitization as mentioned previously. The Company does, however, conduct a
significant amount of business with a small number of large grocery retailers.

During the year ended December 31, 2015, the Company reported sales to one customer representing 14.0% of total sales.
These revenues were reported in the Meat Products Group. No other sales were made to any one customer that represented
in excess of 10% of total sales.

During the year ended December 31, 2014, the Company reported sales to two customers representing 15.5% and 11.1% of
total sales from continuing operations. No other sales were made to any one customer that represented in excess of 10% of
total sales.

The Company is exposed to credit risk on its notes receivable from a financial institution that holds an equity interest in an
unconsolidated structured entity in respect of the accounts receivable securitization program as described in Note 25 of the
Company's 2015 audited consolidated financial statements. Management believes that this credit risk is limited by the long-
term AA- debt rating held by the counterparty. The Company is exposed to credit risk on its cash and cash equivalents
(comprising primarily of deposits with Canadian chartered banks) and non-exchange-traded derivative contracts. The
Company mitigates this credit risk by transacting primarily with counterparties that are major international financial institutions
with long-term debt ratings of A or higher. The Company’s maximum exposure to credit risk at the balance sheet date
consisted primarily of the carrying value of non-derivative financial assets and non-exchange-traded derivatives with positive
fair values.

Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

The Company manages liquidity risk by monitoring forecasted and actual cash flows, minimizing reliance on any single source
of credit, maintaining sufficient undrawn committed credit facilities and managing the maturity profiles of financial assets and
financial liabilities to minimize re-financing risk.

As at December 31, 2015, the Company had available undrawn committed credit of $139.7 million (2014: $178.4 million)
under the terms of its principal banking arrangements (refer to Note 13 of the Company's 2015 audited consolidated financial
statements). These banking arrangements are subject to certain covenants and other restrictions.

Market Risk

Interest Rate Risk

Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instrument will
fluctuate due to changes in market interest rates.

The Company’s interest rate risk arises from long-term borrowings issued at fixed rates that create fair value interest rate risk
and variable rate borrowings that create cash flow interest rate risk. In addition, the Company’s cash balances are typically
invested in short-term interest bearing assets.

The Company manages its interest rate risk exposure by using a mix of fixed and variable rate debt and periodically using
interest rate derivatives to achieve the desired proportion of variable to fixed-rate debt.

At December 31, 2015 and 2014, the Company had no variable rate debt, however, the Company is exposed to floating
interest rates on its accounts receivable securitization program. As at December 31, 2015, the amount serviced pursuant to
this program was $91.5 million at a weighted average interest rate of 1.6% (2014: $76.6 million at a weighted average interest
rate of 2.1%). The maximum amount available to the Company under these programs is $110.0 million (2014: $110.0 million).

As at December 31, 2015, 10.4% (2014: 12.0%) of the Company’s outstanding debt and revolving accounts receivable
securitization program were not exposed to interest rate movements.

On March 14, 2014, the Company issued a notice of repayment of its notes payable, with a subsequent repayment on April 14,
2014 (refer to Note 13 of the Company's 2015 audited consolidated financial statements). On the original issuance of the U.S.
denominated debt, and in order to hedge against the foreign exchange risk associated with the issuance of U.S. denominated
debt, the Company entered into cross-currency interest rate swaps. The cross-currency swaps converted the U.S.
denominated fixed-rate notes, into fixed-rate Canadian denominated notes, and were accounted for as cash flow hedges.

As a result of the decision to accelerate the repayment of all outstanding notes, hedge accounting on all of the cross-currency
interest rate swaps has been discontinued. This resulted in a reclassification of $9.6 million from accumulated other
comprehensive income (loss), to interest expense and other financing costs for the year ended December 31, 2014. During

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

the same period, the Company terminated cross-currency interest rate swaps maturing in 2021 and the remaining cross-
currency swaps matured in 2014.

As at December 31, 2015, the Company had fixed-rate debt of $10.7 million (2014: $10.5 million) with a weighted average
notional interest rate of 4.4% (2014: 4.4%). Changes in market interest rates cause the fair value of long-term debt with fixed
interest rates to fluctuate but do not affect net earnings, as the Company’s debt is carried at amortized cost and the carrying
value does not change as interest rates change.

Foreign Exchange Risk

Foreign exchange risk refers to the risk that the value of financial instruments or cash flows will fluctuate due to changes in
foreign exchange rates.

The Company’s foreign exchange risk arises primarily from transactions in currencies other than Canadian dollars, U.S. dollar-
denominated borrowings, and investments in foreign operations.

Commodity Price Risk

The Company is exposed to price risk related to commodities such as live hogs, fuel costs, and purchases of certain other
agricultural commodities used as raw materials, including feed grains. The Company may use fixed price contracts with
suppliers as well as exchange-traded and over-the-counter futures and options to manage its exposure to price fluctuations on
operating results.

Derivatives designated as a hedge of an anticipated or forecasted transaction are accounted for either as cash flow or fair
value hedges and are managed within the Company’s hedge accounting portfolio.

The Company applies the “normal purchases” classification to certain contracts that are entered into for the purpose of
procuring commodities to be used in production.

For a comprehensive discussion on the Company’s risk management practices and derivative exposures, please refer to Note
18 of the Company's 2015 audited consolidated financial statements.

SHARE CAPITAL

As at December 31, 2015 there were 135,058,974 voting common shares issued and outstanding (2014: 142,943,520). As at
February 19, 2016, there were 134,571,289 common shares issued and outstanding.

In each of the quarters of 2015, the Company declared and paid cash dividends of $0.08 per voting common share,
representing a total annual dividend of $0.32 per voting common share and aggregate dividend payments of $44.7 million. In
each of the quarters of 2014, the Company declared and paid cash dividends of $0.04 per voting common share, representing
a total annual dividend of $0.16 per voting common share and aggregate dividend payments of $22.7 million.

OTHER MATTERS

On February 29, 2016, the Board of Directors approved an increase in the quarterly cash dividend to $0.09 per share, $0.36
per share on an annual basis, from $0.08 per share, payable March 31, 2016, to shareholders of record at the close of
business on March 11, 2016. Unless indicated otherwise by the Company in writing at or before the time the dividend is paid,
the dividend will be considered an Eligible Dividend for the purposes of the “Enhanced Dividend Tax Credit System”.

EMPLOYEE BENEFIT PLANS

The cost of pensions and other post-retirement benefits earned by employees is actuarially determined using the projected
unit credit method calculated on service and Management’s best estimate of salary escalation, retirement ages of employees
and expected health care costs. Management employs external experts to advise it when deciding upon the appropriate
estimates to use to value employee benefit plan obligations and expenses. These estimates are determined at the beginning
of each year and re-evaluated if changes in estimates and market conditions indicate that there may be a significant effect on
the Company’s financial statements.

During 2015, the Company recorded a pre-tax gain of $0.5 million through other comprehensive income (loss) related to the
re-measurement of plan assets and liabilities. This includes $1.4 million of pre-tax returns on plan assets in excess of the
discount rate, which was offset by a pre-tax loss of $0.8 million related to differences between plan experience compared to
actuarial assumptions.

During 2014, the Company recorded a loss of $67.0 million through other comprehensive income (loss) related to the re-
measurement of plan assets and liabilities. This includes a loss of $102.4 million related to changes in liability assumptions,
primarily a change in the discount rate, and a further $21.5 million as a result of changes in other actuarial assumptions,

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

primarily related to a change in mortality rate assumptions. This was partially offset by $57.9 million of returns on plan assets
in excess of the discount rate. The above amounts exclude the results of discontinued operations.

The Company operates both defined contribution and defined benefit plans. The assets of the defined benefit plans are
invested primarily in foreign and domestic fixed income and equity securities that are subject to fluctuations in market prices.
Discount rates used to measure plan liabilities are based on long-term market interest rates. Fluctuations in these market
prices and rates can impact pension expense and funding requirements. In 2015, the investment return before expenses on
the Company's defined benefit pension plan assets was 3.9% compared to 10.1% in 2014.

The Company's contributions are funded through cash flows generated from operations. Management anticipates that future
cash flows from operations will be sufficient to fund expected future cash contributions. Contributions to defined benefit plans
during 2015 were $5.2 million (2014: $6.3 million excluding discontinued operations).

The Company expects to contribute $10.7 million to the pension plans in 2016, inclusive of defined contribution and multi-
employer plans.

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

SUMMARY OF QUARTERLY RESULTS

The following is a summary of unaudited quarterly financial information for each quarter in the last three fiscal years:

($ millions except earnings per share)
Sales(i)

Net earnings (loss) from continuing

operations(i)

Net earnings (loss)

Earnings (loss) per share from continuing

operations(i)
Basic(ii)

Diluted(ii)

Adjusted EPS(ii)(iii)

Earnings (loss) per share(ii)

Basic(ii)

Diluted(ii)

First
Quarter

$ 780.2

711.3

689.4

Second
Quarter

$ 820.8

831.8

759.3

Third
Quarter

$ 818.8

820.1

757.8

Fourth
Quarter

$ 873.1

794.0

748.3

Total(iv)
$ 3,292.9

3,157.2

2,954.8

$ (2.9)

$ (7.5)

$ 18.7

$ 33.3

41.6

(124.6)

(30.6)

(39.5)

(38.4)

(26.7)

(24.5)

(23.0)

(47.9)

(213.8)

(141.4)

$ (2.9)

$ (7.5)

$ 18.7

$ 33.3

41.6

(132.0)

(14.7)

898.9

0.0

(26.8)

15.5

(28.2)

511.4

711.9

512.2

$ (0.02)

$ (0.05)

$ 0.13

$ 0.24

0.30

(0.89)

(0.22)

(0.28)

(0.27)

(0.19)

(0.18)

(0.16)

(0.34)

(1.51)

(1.01)

$ (0.02)

$ (0.05)

$ 0.13

$ 0.24

0.29

(0.89)

(0.22)

(0.28)

(0.27)

(0.19)

(0.18)

(0.16)

(0.34)

(1.51)

(1.01)

$ 0.05

$ 0.13

$ 0.16

$ 0.25

0.58

(0.24)

(0.12)

(0.25)

(0.12)

(0.19)

(0.08)

(0.41)

(0.56)

(1.08)

$ (0.02)

$ (0.05)

$ 0.13

$ 0.24

(0.95)

(0.11)

6.38

(0.02)

(0.19)

0.09

(0.20)

3.58

$ (0.02)

$ (0.05)

$ 0.13

$ 0.24

(0.95)

(0.11)

6.38

(0.02)

(0.19)

0.09

(0.20)

3.58

0.30

5.03

3.55

0.29

5.03

3.55

2015

2014

2013

2015

2014

2013

2015

2014

2013

2015

2014

2013

2015

2014

2013

2015

2014

2013

2015

2014

2013

2015

2014

2013

(i) Figures exclude discontinued operations.
(ii) Basic and diluted earnings (loss) per share, earnings (loss) per share from continuing operations and Adjusted Earnings

(loss) per Share from continuing operations are based on amounts attributable to common shareholders.

(iii) Refer to Non-IFRS Financial Measures starting on page 27 of this document.
(iv) May not add due to rounding.

Quarterly sales in 2015 were affected by improved volume in fresh pork and poultry, increased pricing in prepared meats in
2014, a favourable sales mix in fresh poultry and an extra week in the fourth quarter of 2015. This was partially offset by lower
market prices and a slight decline in prepared meats volume. Quarterly sales in 2014 were affected by higher market prices in
fresh pork, increased pricing in prepared meats in 2013 and 2014, offset by lower volume in prepared meats.

Quarterly net earnings from continuing operations in 2015 were affected by price increases in prepared meats in 2014, lower
transitional costs, improved pork and poultry processing margins, restructuring and other related costs, changes in fair value of
non-designated interest rate swaps, (gains) losses from changes in market values of biological assets, and (gains) losses on
futures contracts. Quarterly net earnings from continuing operations in 2014 were affected by transitional costs, lower volume
and compressed margins due to increased raw material costs in prepared meats, higher market prices for hogs, early
redemption financing costs, restructuring and other related costs, the expense related to a modification of a long-term

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

incentive plan and changes in fair value of non-designated interest rate swaps, (gains) losses from changes in market values
of biological assets, and (gains) losses on futures contracts.

For an explanation and analysis of quarterly results, please refer to the Company’s Management’s Discussion and Analysis for
each of the respective quarterly periods which are filed on SEDAR and also available on the Company’s website at
www.mapleleaffoods.com.

SUMMARY OF 2015 FOURTH QUARTER RESULTS

The following is a summary of sales by business segment:

($ millions)
(Unaudited)

Meat Products Group
Agribusiness Group
Total Sales(i)

The following is a summary of Adjusted Operating Earnings by Business Segment:

($ millions)
(Unaudited)

Meat Products Group
Agribusiness Group
Adjusted Operating Earnings(i)

Fourth Quarter

2015

2014

Change

$ 868.5

$ 789.7

4.6

4.3

$ 873.1

$ 794.0

10.0%

7.0%

10.0%

Fourth Quarter

2015(ii)
$ 54.6

(6.9)

2014(ii)
$ (19.1)

Change(ii)
$ 73.7

5.4

(12.3)

$ 47.8

$ (13.7)

$ 61.4

(i)

2014 figures exclude the results of the Bakery Products Group, which are reported as discontinued operations. Refer to
Note 22 of the Company's 2015 audited consolidated financial statements.

(ii) May not add due to rounding.

Sales of $873.1 million for the fourth quarter increased 10.0% from last year, or 7.0% after adjusting for the impacts of foreign
exchange. This improvement was due to increased volume in fresh pork and poultry, a favourable sales mix in fresh poultry
and an extra week in the fourth quarter of 2015, which was partially offset by lower selling prices for fresh pork and a slight
decline in prepared meats volume.

Adjusted Operating Earnings for the fourth quarter was $47.8 million compared to a loss of $13.7 million last year. Earnings in
prepared meats increased as a result of lower operating costs in the Company's new prepared meats plant network, improved
sales mix resulting from a higher proportion of retail branded volume, and pricing. This was partially offset by a sharp rise in
pork belly prices, which compressed margins. Fresh pork earnings grew due to increased volume and improved export
margins. While industry pork processing margins strengthened compared to last year, when they were below the five year
average, the benefit to the Company was partially offset by declining by-product values and a sharp rise in belly prices, which
affected prepared meats margins. Earnings in fresh poultry increased due to higher volume, stronger industry processing
margins, an improved sales mix reflecting higher retail branded volume and increased operating efficiencies.

Earnings in the Agribusiness Group declined due to a substantial decline in hog prices, which was not fully offset by the
Company's risk management program and the benefit of a lower Canadian dollar.

Adjusted Earnings per Share in the fourth quarter of 2015 was $0.25 compared to a loss of $0.08 last year. Net earnings from
continuing operations for the fourth quarter was $33.3 million ($0.24 per share) compared to net loss from continuing
operations of $23.0 million (loss of $0.16 per share) last year.

SEASONALITY

The Company is sufficiently large and diversified that seasonal factors within each operation and business tend to offset each
other; therefore, in isolation, they do not have a material impact on the Company’s consolidated earnings. For example, in
general, pork processing margins tend to be higher in the last half of the year when hog prices historically decline and, as a
result, earnings from hog production operations tend to be lower. Strong demand for grilled meat products positively affects the
fresh and prepared meats operations in the summer, while back-to-school promotions support increased sales of sliced meats
and lunch items in the fall. Higher demand for turkey and ham products occurs in the spring and fourth quarter holiday
seasons.

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

ENVIRONMENT

Maple Leaf Foods is committed to maintaining high standards of environmental responsibility and positive relationships in the
communities where it operates. It operates within the framework of an environmental policy entitled “Our Environmental
Commitment” that is approved by the Board of Directors’ Environment, Health and Safety Committee ("Committee").

The Company’s environmental program is monitored on a regular basis by the Committee, including compliance with
regulatory requirements and the use of internal environmental specialists and independent, external environmental experts.
The Company continues to invest in environmental infrastructure related to water, waste, and air emissions to ensure that
environmental standards continue to be met or exceeded, while implementing procedures to reduce the impact of operations
on the environment. In 2015, the Company closed its two remaining legacy facilities as part of its network transition under the
Plan. In each case, environmental assessments were done to ensure that environmental matters are appropriately addressed
during decommissioning activities.

Expenditures related to current environmental requirements are not expected to have a material effect on the financial position
or earnings of the Company. However, there can be no assurance that certain events will not occur that will cause
expenditures related to the environment to be significant and have a material adverse effect on the Company’s financial
condition or results of operations. Such events could include, but not be limited to, additional environmental regulation or the
occurrence of an adverse event at one of the Company’s locations. The Company currently has a provision of $8.3 million
related to expected environmental remediation costs, please refer to Note 12 of the Company's 2015 audited consolidated
financial statements for additional information.

As a large food company there are health, environmental, and social issues that go beyond short-term profitability that
Management believes must shape its business if the Company is to realize a sustainable future. Increasingly, sound
environmental sustainability practices are becoming a key component of maintaining a competitive advantage. In 2015, the
Company announced a long-term goal to reduce its environmental footprint by 50% by 2025 in three key areas: climate
change, water usage and waste reduction. Performance will be communicated in the Company’s annual Sustainability Report.

RISK FACTORS

The Company operates in the food processing and agricultural businesses, and is therefore subject to risks and uncertainties
related to this business that may have adverse effects on the Company’s results of operations and financial condition. The
following risk factors should be considered carefully. These risk factors, along with other risks and uncertainties not currently
known to the Company, or that the Company currently considers immaterial, could materially and adversely affect the
Company’s future operating results and could cause actual events to differ materially from those described in forward-looking
information, including any financial outlooks, relating to the Company.

Risks Related to the Business of Maple Leaf Foods

Focus on Protein Business

In 2013 and 2014, the Company sold its non-protein operations including potato products, rendering services and bakery
operations. The Company is now primarily a protein business and as a result it is possible that earnings volatility may increase
and synergies and economies of scale will be forgone. Each of these factors may have a material adverse effect on the
Company’s financial condition and results of operations.

Risk of Returning or not Returning Capital to Shareholders

The Company has retained funds realized on the sales of its potato products, rendering services and bakery operations after
the repayment of debt. In 2015, the Company initiated a normal course issuer bid for 8.65 million of its common shares, which
was completed by the end of January 2016 for a total of $194.5 million. There can be no assurance that the Company will
return any further funds to shareholders. In addition, if funds are returned to shareholders, there can be no assurance as to the
exact mechanism by which such funds will be returned to shareholders. Furthermore, a return of funds or a failure to return
funds to shareholders may have a material adverse effect on the Company’s share price.

Implementing the Value Creation Plan

The Plan announced in October 2010 is complex, lengthy, and transformational. Under the Plan, the Company constructed
one large-scale manufacturing facility, closed eight plants and expanded three others. The Company also reconfigured its
distribution systems into two large distribution centers. The Plan is substantially complete but work still remains to optimize the
operations and eliminate ramp-up inefficiencies.

There can be no assurance that the Company will be successful in achieving the full expected benefits of the Plan. As with any
complex project or plan, events will transpire outside the Company’s control that were not anticipated or expected when the
Plan was launched.

As a result of these initiatives, the Company’s operations will be more concentrated in fewer facilities resulting in the risk that
any unforeseen disruption in such facilities could have a greater effect on the operations of the Company as a whole.

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

Leverage and Availability of Capital

The ability of the Company to secure short-term and long-term financing on terms acceptable to the Company is critical to
grow and fund business growth and manage its liquidity. The ability to secure such additional capital on commercially
favourable and acceptable terms will, in part be determined by achieving the full financial objectives of the Plan. The failure or
inability of the Company to secure short-term and long-term financing in the future on terms that are commercially reasonable
and acceptable to the Company could have a significant impact on the Company’s opportunity for growth. Even if the
Company does successfully raise additional capital when needed, if it issues equity securities, investors will be diluted, and if it
raises additional debt, it will be further leveraged and could be subject to restrictive covenants, such as restrictions on paying
dividends or being required to pledge assets.

Systems Conversion, Standardization and Common Systems

The Company regularly implements process improvement initiatives to simplify and harmonize its systems and processes to
optimize performance and reduce the risk of errors in financial reporting. There cannot be any guarantee that any such
changes will improve current processes or operating results or reduce the risk of errors in financial reporting. Any of these
failures could have a material adverse impact on the Company’s financial condition and results of operations.

The Company continues to provide, among other things, information technology services to certain of its formerly owned
operations under transitional arrangements with the purchasers on a cost recovery basis. The Company has developed a plan
to reduce the size and costs of information technology systems to fit its remaining operations at the end of the transitional
assistance period. There can be no assurance that the Company will be fully successful in eliminating these costs at the end
of the transitional assistance period or that after the reduction the information systems will maintain their accuracy and
reliability. Any of these failures could have a material adverse impact on the Company’s financial condition and results of
operations.

Food Safety and Consumer Health

The Company is subject to risks that affect the food industry in general, including risks posed by food spoilage, accidental
contamination, product tampering, consumer product liability, and the potential costs and disruptions of a product recall. The
Company’s products are susceptible to contamination by disease-producing organisms, or pathogens, such as E. coli,
salmonella and listeria. There is a risk that these pathogens could be present in the Company’s products. The Company
actively manages these risks by maintaining strict and rigorous controls and processes in its manufacturing facilities and
distribution systems and by maintaining prudent levels of insurance. However, the Company cannot assure that such systems,
even when working effectively, will eliminate the risks related to food safety. The Company could be required to recall certain of
its products in the event of contamination or adverse test results or as precautionary measures, similar to other recalls initiated
in the past. There is also a risk that not all of the product subject to the recall will be properly identified, or that the recall will
not be successful or not be enacted in a timely manner. Any product contamination could subject the Company to product
liability claims, adverse publicity and government scrutiny, investigation or intervention, resulting in increased costs and
decreased sales. Many of these costs and losses are not covered by insurance. Any of these events could have a material
adverse impact on the Company’s financial condition and results of operations.

Business Acquisitions, Divestitures, and Capital Expansion Projects

While the Company’s focus has been integration of existing operations and supply chain optimization, the Company continues
to review opportunities for strategic growth through acquisitions. Any acquisitions may involve large transactions or
realignment of existing investments, and present financial, managerial and operational challenges, which, if not successfully
overcome, may reduce the Company’s profitability. These risks include: the diversion of Management’s attention from existing
core businesses; difficulties integrating or separating personnel, financial, and other systems; adverse effects on existing
business relationships with suppliers and customers; inaccurate estimates of the rate of return on acquisitions or investments;
inaccurate estimates of fair value made in the accounting for acquisitions and amortization of acquired intangible assets, which
could reduce future reported earnings; potential loss of customers or key employees of acquired businesses; and indemnities
and potential disputes with the buyers or sellers. Any of these items could materially adversely affect the Company’s financial
condition and results of operations.

The Company may, from time to time, determine that certain aspects of its operations are not required to be owned to support
its core business operations and may seek to sell an operation if it believes it can realize sufficient value from its sale. Such a
sale may divert Management’s attention from existing core businesses during the sale process, create difficulties in separating
personnel, financial, and other systems, and cause adverse effects on existing business relationships with suppliers and
customers. Any of these items could materially adversely affect the Company’s financial condition and result in a reduction of
earnings beyond the earnings of any operation to be sold.

Pension Plan Assets and Liabilities

In the normal course of business, the Company provides post-retirement pension benefits to its employees under both defined
contribution and defined benefit pension plan arrangements. The funded status of the plans significantly affects the net

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

periodic benefit costs of the Company’s pension plans and the ongoing funding requirements of those plans. Among other
factors, changes in interest rates, mortality rates, early retirement rates, and the market value of plan assets can affect the
level of plan funding required, increase the Company’s future funding requirements, and cause volatility in the net periodic
pension cost as well as the Company’s financial results. Furthermore, the Company has merged, and is in the process of
merging, a number of its defined benefit pension plans. The funding status of the individual plans depends, in part, on whether
the mergers are approved. Failure by the regulators to approve the mergers could also result in an increase to the Company’s
funding requirements. Any increase in pension expense or funding requirements could have a material adverse impact on the
Company’s financial condition and results of operations.

Hog and Pork Market Cyclicality and Supply

The Company’s results of operations and financial condition are partially dependent upon the cost and supply of hogs as well
as the selling prices for fresh meat products, both of which are influenced by constantly changing market forces of supply and
demand over which the Company has little or no control. These prices, for the most part, are denominated in or related to U.S.
dollars, which adds further variability due to fluctuations in exchange rates. The North American primary pork processing
markets are highly competitive, with major and regional companies competing in each market. The market prices for pork
products regularly experience periods of supply and demand imbalance and are sensitive to changes in industry processing
capacity. Other factors that can influence the supply and market price of live hogs include: fluctuations in the size of herds
maintained by North American hog suppliers; environmental and conservation regulations; economic conditions; the relative
cost of feed for hogs; weather; livestock diseases; and changes to foreign jurisdiction restrictions on drugs, vitamin and feed
additives used in hogs raised in Canada. There can be no assurance that all or part of any such increased costs experienced
by the Company from time to time can be passed along to consumers of the Company’s products directly or in a timely
manner or that meat restricted from certain foreign markets can be sold at acceptable prices. The factors described above
may also impact the supply of hogs available for processing at the Company’s pork processing plants by negatively impacting
the financial strength of the various independent farming operations upon which the Company relies to meet its requirements
for hogs. Any of these could have a material adverse effect on the Company's financial condition and results of operations.

Livestock

The Company’s operations and the demand for the Company’s products can be significantly affected by outbreaks of disease
among livestock, or attributed to livestock whether it occurs within the Company’s production operations or in the operations of
third parties.

The Company monitors herd health status and has strict bio-security procedures and employee training programs throughout
its hog production system and ensures the animals receive veterinary medications as required. However, there is no
guarantee these processes will not fail. In addition, not all livestock procured by the Company may be subject to these
processes, as the majority of hog and poultry livestock processed by the Company is purchased from independent third
parties. In addition to risks associated with maintaining the health of the Company’s livestock, any outbreak of disease
elsewhere in the world could reduce consumer confidence in the meat products affected by the particular disease and
generate adverse publicity. Accordingly, there can be no assurance that an outbreak of animal disease in Canada or elsewhere
will not have a material adverse effect on the Company’s financial condition and results of operations.

The Company is increasing its committed sales of raised without antibiotic pork and meat products and in turn expanding the
portion of its hog supply raised without antibiotics. Hogs raised without antibiotics have a significantly higher cost of production
and command higher prices. If the Company fails to find markets or buyers willing to pay the premium price for all the raised
without antibiotic meat produced, a portion of the higher cost meat will have to be sold in conventional channels at the lower
price conventionally raised meat commands.

The Company has developed a comprehensive internal contingency plan for dealing with animal disease occurrences and/or a
more broad-based pandemic. It has taken steps to support the Canadian government in enhancing both the country’s
prevention measures and preparedness plans. There can be no assurance, however, that these prevention measures or plans
will be successful in minimizing or containing the impact of an outbreak of animal disease and that such outbreak will not have
a material adverse effect on the Company’s financial condition and results of operations. Furthermore, the Company’s supply
of raised without antibiotic meats may be at a greater risk supply disruption in the event of an animal disease outbreak.

Foreign Currencies

A portion of the Company’s revenues and costs are either denominated in or directly linked to other currencies (primarily U.S.
dollars and Japanese yen). In periods when the Canadian dollar has appreciated both rapidly and materially against these
foreign currencies, revenues linked to U.S. dollars or Japanese yen are immediately reduced, while the Company’s ability to
change prices or realize natural hedges may lag the immediate currency change. The effect of such sudden changes in
exchange rates can have a significant immediate impact on the Company’s earnings. Due to the diversity of the Company’s
operations, normal fluctuations in other currencies do not generally have a material impact on the Company’s profitability in the
short term due to either natural hedges and offsetting currency exposures (for example, when revenues and costs are both
linked to other currencies) or the ability in the near term to change prices of its products to offset adverse currency

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

movements. However, as the Company competes in international markets, and faces competition in its domestic markets from
U.S. competitors, significant changes in the Canadian to U.S. dollar exchange rate can have, and have had, significant effects
on the Company’s relative competitiveness in its domestic and international markets, which can have, and have had,
significant effects on the Company’s financial condition and results of operations.

Commodities

The Company is a purchaser of, and its business is dependent on, certain commodities in the course of normal operations,
such as feed grains, livestock, and energy, such as oil-based fuel, natural gas, and electricity. Commodity prices are subject to
fluctuation and such fluctuations are sometimes severe. The Company may use commodity futures and options for hedging
purposes to reduce the effect of changing prices in the short term, but such hedges may not be successful in mitigating this
commodity price risk and may, in some circumstances, subject the Company to loss. On a longer-term basis, the Company
attempts to manage the risk of increases in commodities and other input costs by increasing the prices it charges to its
customers; however, no assurance can be given that customers will continue to purchase the Company’s products if prices
rise. Any fluctuations in commodity prices that the Company is unable to properly hedge or mitigate could have a material
adverse effect on the Company’s financial condition and results of operations.

International Trade

The Company exports significant amounts of its products to customers outside of Canada and certain of its inputs are affected
by global commodity prices. The Company’s international operations are subject to inherent risks, including: change in the free
flow of food products between countries; fluctuations in currency values; discriminatory fiscal policies; unexpected changes in
local regulations and laws; and the uncertainty of enforcement of remedies in foreign jurisdictions. In addition, foreign
jurisdictions could impose tariffs, quotas, trade barriers, and other similar restrictions on the Company’s international sales, as
well as subsidize competing agricultural products. All of these risks could result in increased costs or decreased revenues,
either of which could have a material adverse effect on the Company’s financial condition and results of operations.

Regulation

The Company’s operations are subject to extensive regulation by government agencies in the countries in which it operates,
including: the Canadian Food Inspection Agency; the Ministry of Agriculture in Canada; provincial Ministries of the Environment
in Canada; and the United States Department of Agriculture. These agencies regulate the processing, packaging, storage,
distribution, advertising, and labeling of the Company’s products, including food safety standards. The Company’s
manufacturing facilities and products are subject to inspection by federal, provincial, and local authorities. The Company
strives to maintain compliance with all laws and regulations and maintains all permits and licenses relating to its operations.
Nevertheless, there can be no assurance that the Company is in compliance with such laws and regulations, has all necessary
permits and licenses, and will be able to comply with such laws and regulations, permits and licenses in the future. Failure by
the Company to comply with applicable laws and regulations and permits and licenses could subject the Company to civil
remedies, including fines, injunctions, recalls or seizures, as well as potential criminal sanctions, which could have a material
adverse effect on the Company’s financial condition and results of operations. Various governments throughout the world are
considering regulatory proposals relating to genetically modified organisms, drug residues in food ingredients, food safety, and
market and environmental regulation that, if adopted, may increase the Company’s costs. There can be no assurance that
additional regulation will not be enacted. In fact, new regulations and standards were enacted to address the risks associated
with certain pathogens in response to the Company’s August 2008 recall of ready-to-eat meat products. If any of these or other
proposals or regulations are enacted, the Company could experience a disruption in the supply or distribution of its products,
increased operating costs, and significant additional cost for capital improvements. The Company may be unable to pass on
the cost increases associated with such increased regulatory burden to its customers without incurring volume loss as a result
of higher prices. Any of these events could have a material adverse effect on the Company’s financial condition and results of
operations.

Legal Matters

In the normal course of its operations, the Company becomes involved in various legal actions, either as plaintiff or defendant,
relating to its commercial relationships, employment matters, product liabilities, in addition to other things. The Company
generally believes that the resolution of these claims will not have a material effect on the Company based, in part, on the
availability of insurance. However, the final outcome with respect to actions outstanding, pending or with respect to future
claims cannot be predicted with certainty. Furthermore, even if any action is settled within insurance limits, this can result in
increases to the Company’s insurance premiums. Therefore there can be no assurance that their resolution will not have a
material adverse effect on the Company’s financial condition or results of operations.

Consumer Trends

Success of the Company depends in part on the Company’s ability to respond to market trends and produce innovative
products that anticipate and respond to the changing tastes and dietary habits of consumers. From time to time certain
products are deemed more or less healthy and this can impact consumer buying patterns. The Company’s failure to anticipate,

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

identify, or react to these changes or to innovate could result in declining demand and prices for the Company’s products,
which in turn could have a material adverse effect on the Company’s financial condition and results of operations.

Environmental Regulation

The Company’s operations are subject to extensive environmental laws and regulations pertaining to the discharge of
materials into the environment and the handling and disposition of wastes (including solid and hazardous wastes) or otherwise
relating to protection of the environment. Failure to comply could have serious consequences, such as criminal as well as civil
penalties, liability for damages, and negative publicity for the Company. No assurances can be given that additional
environmental issues relating to presently known matters or identified sites or to other matters or sites will not require
additional expenditures, or that requirements applicable to the Company will not be altered in ways that will require the
Company to incur significant additional costs. In addition, certain facilities of the Company have been in operation for many
years and, over time, the Company and other prior operators of such facilities may have generated and disposed of waste
which is or may be considered to be hazardous. Future discovery of previously unknown contamination of property underlying
or in the vicinity of the Company’s present or former properties or manufacturing facilities and/or waste disposal sites could
require the Company to incur material unforeseen expenses. Occurrences of any such events could have a material adverse
effect on the Company’s financial condition and results of operations.

Consolidating Customer Environment

As the retail grocery and foodservice trades continue to consolidate and customers grow larger and more sophisticated, the
Company is required to adjust to changes in purchasing practices and changing customer requirements. Failure to do so could
result in losing sales volumes and market share. The Company’s net sales and profitability could also be affected by
deterioration in the financial condition of, or other adverse developments in, the relationship with one or more of its major
customers. Any of these events could have a material adverse effect on the Company’s financial condition and results of
operations.

Competitive Industry Environment

The food industry is intensely competitive. In many product categories in which the Company operates there are low barriers
to entry. Competition is based on product availability, product quality, price, effective promotions, and the ability to target
changing consumer preferences. The Company experiences price pressure from time to time as a result of competitors’
promotional efforts and in product categories and markets characterized by low capacity utilization. Increased competition
could result in reduced sales, margins, profits, and market share, all of which could have a material adverse effect on the
Company’s financial condition and results of operations.

Employment Matters

The Company and its subsidiaries have approximately 11,500 full-time and part-time employees, which include salaried and
union employees, many of whom are covered by collective agreements. These employees are located in various jurisdictions,
each such jurisdiction having differing employment laws. While the Company maintains systems and procedures to comply
with the applicable requirements, there is a risk that failures or lapses by individual managers could result in a violation or
cause of action that could have a material adverse effect on the Company’s financial condition and results of operations.
Furthermore, if a collective agreement covering a significant number of employees or involving certain key employees were to
expire or otherwise cease to have effect leading to a work stoppage, there can be no assurance that such work stoppage
would not have a material adverse effect on the Company’s financial condition and results of operations. The Company’s
success is also dependent on its ability to recruit and retain qualified personnel. The loss of one or more key personnel could
have a material adverse effect on the Company’s financial condition and results of operations.

Product Pricing

The Company’s profitability is dependent, in large part, on the Company’s ability to make pricing decisions regarding its
products that, on one hand encourage consumers to buy, yet on the other hand recoup development and other costs
associated with those products. Products that are priced too high will not sell and products priced too low will not generate an
adequate return. Accordingly, any failure by the Company to properly price its products could have a material adverse effect on
the Company’s financial condition and results of operations.

Supply Chain Management

Successful management of the Company’s supply chain is critical to the Company’s success. Insufficient supply of products
threatens the Company’s ability to meet customer demands while over capacity threatens the Company’s ability to generate
competitive profit margins. Accordingly, any failure by the Company to properly manage the Company’s supply chain could
have a material adverse effect on the Company’s financial condition and results of operations.

Strategic Risk Management

Successful identification and management of the strategic risks facing the Company from time to time is critical to the
Company’s success. Among other things, these risks include changes in technology, the food industry, customers, consumers,

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

and competitors. Failure to properly adapt to changes in strategic risks could have a material adverse effect on the Company’s
financial condition and results of operations.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of consolidated financial statements in accordance with IFRS requires Management to make judgements,
estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,
income, and expenses. Actual amounts may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in
the period in which the estimates are revised and in any future periods affected.

Judgements included in the financial statements are decisions made by Management, based on analysis of relevant
information available at the time the decision is made. Judgements relate to the application of accounting policies and
decisions related to the measurement, recognition, and disclosure of financial amounts. Information about significant areas of
critical judgements in applying accounting policies, that have the most significant effects on the amounts recognized in the
consolidated financial statements, are included both below and in the statement notes relating to items subject to significant
and critical judgements.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies, that have
the most significant effects on the amounts recognized in the consolidated financial statements, are included both below and in
the statement notes relating to items subject to significant estimate uncertainty and critical judgements.

Long-Lived Assets Valuation

The Company performs impairment testing annually for goodwill and indefinite life intangible assets and, when circumstances
indicate that there may be impairment, for other long-lived assets. Management judgement is involved in determining if there
are circumstances indicating that testing for impairment is required, and in identifying Cash Generating Units (“CGUs”) for the
purpose of impairment testing.

The Company assesses impairment by comparing the recoverable amount of a long-lived asset, CGU, or CGU group to its
carrying value. The recoverable amount is defined as the higher of: (i) value in use; or (ii) fair value less cost to sell.

The determination of the recoverable amount involves significant estimates and assumptions, including those with respect to
future cash inflows and outflows, discount rates, and asset lives. These estimates and assumptions could affect the
Company’s future results if the current estimates of future performance and fair values change. These determinations will
affect the amount of amortization expense on definite life intangible assets recognized in future periods.

Measurement of Fair Values

A number of the Company’s accounting policies and disclosures require the measurement of fair values, for both financial and
non-financial assets and liabilities. When the measurement of fair values cannot be determined based on quoted prices in
active markets, fair value is measured using valuation techniques and models. The inputs to these models are taken from
observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair
values. Changes in assumptions about the inputs to these models could affect the reported fair value of the Company’s
financial and non-financial assets and liabilities.

When measuring fair value of an asset or liability, the Company uses market observable data to the extent that it is possible.
To the extent that these estimates differ from those realized, the measured asset or liability, net earnings, and/or
comprehensive income will be affected in future periods.

Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are
disclosed in Notes 7, 9, 10, 11, and 18 of the Company's 2015 audited consolidated financial statements.

Nature of Interests in Other Entities

Management applies significant judgement in assessing the nature of its interest in an unconsolidated structured entity. The
Company does not hold any equity interest in the structured entity and based on the terms of the agreements under which the
entity is established, the Company does not receive the returns related to their operations and is exposed to limited recourse
with respect to losses (refer to Note 25 of the Company's 2015 audited consolidated financial statements).

Valuation of Inventory

Management makes estimates of the future customer demand for products when establishing appropriate provisions for
inventory. In making these estimates, Management considers the product life of inventory and the profitability of recent sales of
inventory. In many cases, product sold by the Company turns quickly and inventory on-hand values are low, thus reducing the
risk of inventory obsolescence. However, code or “best before” dates are very important in the determination of realizable
value of inventory. Management ensures that systems are in place to highlight and properly value inventory that may be

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

approaching code dates. To the extent that actual losses on inventory differ from those estimated, inventory, net earnings, and
comprehensive income will be affected in future periods.

Biological Assets

Biological assets are measured at each reporting date, at fair value less costs to sell, except when fair value cannot be reliably
measured. If fair value cannot be reliably measured, biological assets are measured at cost less depreciation and impairment
losses. Although a reliable measure of fair value may not be available at the point of initial recognition, it may subsequently
become available. In such circumstances, biological assets are measured at fair value less costs to sell from the point at which
the reliable measure of fair value becomes available. Gains and losses that arise on measuring biological assets at fair value
less costs to sell are recognized in the statement of net earnings in the period in which they arise. Costs to sell include all
costs that would be necessary to sell the biological assets, including costs necessary to get the biological assets to market.
Management uses estimates for some of the inputs into the determination of fair value. To the extent that actual values differ
from estimates, biological assets, net earnings and comprehensive income will be affected in future periods.

Trade Merchandise Allowances and Other Trade Discounts

The Company provides for estimated payments to customers based on various trade programs and contracts that often
include payments that are contingent upon attainment of specified sales volumes. Significant estimates used to determine
these liabilities include: (i) the projected level of sales volume for the relevant period and (ii) customer contracted rates for
allowances, discounts, and rebates. These arrangements are complex and there are a significant number of customers and
products affected. Management has systems and processes in place to estimate and value these obligations. To the extent
that payments on trade discounts differ from estimates of the related liability, accounts payable and accruals, net earnings, and
comprehensive income will be affected in future periods.

Employee Benefit Plans

The cost of pensions and other post-retirement benefits earned by employees is actuarially determined using the projected
unit credit method prorated on service, and Management’s best estimate of salary escalation and mortality rates. Discount
rates used in actuarial calculations are based on long-term interest rates and can have a material effect on the amount of plan
liabilities and expenses. Management employs external experts to advise the Company when deciding upon the appropriate
estimates to use to value employee benefit plan obligations and expenses. To the extent that these estimates differ from those
realized, employee benefit plan assets and liabilities and comprehensive income will be affected in future periods.

Significant actuarial assumptions adopted in measuring the Company’s accrued benefit obligations and net benefit plan expenses
are as follows:

Weighted average discount rate used to calculate the net benefit plan expense
Weighted average discount rate used to calculate year end benefit obligation
Rate of salary increase
Medical cost trend rates

(i) 4.25% was used for the plans related to Canada Bread as at February 12, 2014.

2015
3.75%
3.75%
3.50%
5.00%

2014
4.50%
3.75%(i)
3.50%
5.00%

Information about the sensitivity of the plan obligations to changes in assumptions is presented below:

Increase (decrease) in defined benefit obligation

Actuarial Assumption

Period end discount rate

Sensitivity

3.75% 0.25% decrease

Other post-

Total

retirement

pensions

$ 34,344

benefits

1,655

0.25% increase

$ (33,312)

$ (1,496)

Rate of salary increase
Mortality

3.50%
110% of 2014 Private
Sector Canadian
Pensioners' Mortality
Table, projected
generationally using
Scale CPM-B

0.50% increase
Increase of 1 year
in expected
lifetime of plan
participants

$
3,164
$ 32,035

N/A
1,924

Total

$ 35,999

$ (34,808)

$
3,164
$ 33,959

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

Income Taxes

Provisions for income taxes are based on domestic and international statutory income tax rates and the amount of income
earned in the jurisdictions in which the Company operates. Significant judgement is required in determining income tax
provisions and the recoverability of deferred tax assets. The calculation of current and deferred income tax balances requires
Management to make estimates regarding the carrying values of assets and liabilities that include estimates of future cash
flows and earnings related to such assets and liabilities, the interpretation of income tax legislation in the jurisdictions in which
the Company operates, and the timing of reversal of temporary differences. The Company establishes additional provisions for
income taxes when, despite Management’s opinion that the Company’s tax positions are fully supportable, there is sufficient
complexity or uncertainty in the application of legislation that certain tax positions may be reassessed by tax authorities. The
Company adjusts these additional accruals in light of changing facts and circumstances. To the extent that these adjustments
differ from original estimates, deferred tax assets and liabilities, net earnings, and comprehensive income will be affected in
future periods.

Provisions

The Company evaluates all provisions at each reporting date. These provisions can be significant and are prepared using
estimates of the costs of future activities. In certain instances, Management may determine that these provisions are no longer
required or that certain provisions are insufficient as new events occur or as additional information is obtained. Provisions are
separately identified and disclosed in the Company’s consolidated financial statements. Changes to these estimates may
affect the value of provisions, net earnings, and comprehensive income in future periods.

Share-Based Compensation

The Company uses estimates including, but not limited to, estimates of forfeitures, share price volatility, dividends, expected
life of the award, risk-free interest rates, and Company performance in the calculation of the liability and expenses for certain
share-based incentive plans. These estimates are based on previous experience and may change throughout the life of an
incentive plan. Such changes could impact the carrying value of contributed surplus, liabilities, net earnings, and
comprehensive income in future periods.

Some of the Company’s share-based payment plans are settleable in either cash or equity instruments at the option of the
Company. Management uses judgement in determining the appropriate accounting treatment for these plans, based on
expectations and historical settlement decisions. Changes to accounting treatment based on Management’s judgement may
impact contributed surplus, liabilities, net earnings, and comprehensive income in future periods.

Depreciation and Amortization

The Company’s property and equipment and definite life intangible assets are depreciated and amortized on a straight-line
basis, taking into account the estimated useful lives of the assets and residual values. Changes to these estimates may affect
the carrying value of these assets, inventories, net earnings, and comprehensive income in future periods.

SIGNIFICANT ACCOUNTING POLICIES

Accounting Standards Adopted During the Period

For the first time beginning on January 1, 2015, the Company adopted certain standards and amendments. As required by IAS
8 Accounting Policies, Change in Accounting Estimates and Errors, the nature and the effect of these changes are disclosed
below:

Employee Benefits

Beginning on January 1, 2015, the Company adopted the amendments to IAS 19 Employee Benefits retrospectively. The
amendments to IAS 19 required contributions from employees or third parties that are linked to service to be attributed to
periods of service as a negative benefit. The amendments to IAS 19 provide simplified accounting in certain situations. If the
amount of contribution is independent of the number of years of service, an entity is permitted to recognize such contributions
as a reduction in the service costs in the period in which the service is rendered, instead of allocating the contributions to the
period’s service. The adoption of the amendments to IAS 19 did not have a material impact on the Company's consolidated
financial statements.

Annual Improvements to IFRS (2010 – 2012) and (2011 – 2013) Cycles

Beginning on January 1, 2015, the Company adopted various amendments to a total of nine standards including disclosure on
the aggregation of operating segments in IFRS 8 Operating Segments, measurement of short-term receivables and payables
under IFRS 13 Fair Value Measurement, definition of related party in IAS 24 Related Party Disclosures, and other
amendments. The adoption of these amendments did not have a material impact on the Company's consolidated financial
statements.

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

Accounting Pronouncements Issued But Not Yet Effective

Annual Improvements to IFRS (2012-2014) Cycle

In September 2014, the IASB issued narrow-scope amendments to a total of four standards as part of its annual improvement
process. Amendments were made to clarify items including the consistent classification of assets if they are reclassified from
held for sale to held for distribution in IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, clarification of
interim financial statement disclosure requirements regarding offsetting financial assets and liabilities and clarification of
whether a servicing contract constitutes continuing involvement for the purposes of disclosures of transferred financial assets
that are derecognized under IFRS 7 Financial Instruments: Disclosures. The amendments also include clarification that the
currency of the bonds used to estimate the discount rate for pension obligations must be the same as the currency in which
the benefits will be paid under IAS 19 Employee Benefits and additional requirements under IAS 34 Interim Financial
Reporting that cross-referenced information from the interim financial statements must be available at the same time and on
the same terms as the interim financial statements. The Company intends to adopt these amendments in its consolidated
financial statements for the annual period beginning January 1, 2016. The adoption of these amendments is not expected to
have a material impact on the consolidated financial statements.

Joint Arrangements

In May 2014, IFRS 11 Joint Arrangements was amended to require an acquisition of a joint operation that constitutes a
business to be accounted for using the principles of business combinations in IFRS 3 Business Combinations. This
amendment applies to both initial and additional interest acquired in the joint operation. The Company intends to adopt the
amendments to IFRS 11 in its consolidated financial statements for the annual period beginning January 1, 2016. The adoption
of the amendments to IFRS 11 is not expected to have a material impact on the consolidated financial statements.

Consolidated Financial Statements and Investments in Associates and Joint Ventures

In September 2014, IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures
were amended to clarify an inconsistency between the two standards relating to the sale or contribution of assets from an
investor to its associate or joint venture. The amendment requires that a full gain or loss is recorded if the sold or contributed
assets constitute a business and that a partial gain or loss is recognized when a sale or contribution of assets do not
contribute a business. The Company intends to adopt these amendments in its consolidated financial statements for the
annual period beginning January 1, 2016. The adoption of these amendments is not expected to have a material impact on the
consolidated financial statements.

Revenue Recognition

In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers. IFRS 15 replaces the detailed guidance on
revenue recognition requirements that currently exists under IFRS. IFRS 15 specifies the accounting treatment for all revenue
arising from contracts with customers, unless the contracts are within the scope of other IFRSs. The standard also provides a
model for the measurement and recognition of gains and losses on the sale of certain non-financial assets that are not an
output of the Company's ordinary activities. Additional disclosure is required under the standard, including disaggregation of
total revenue, information about performance obligations, changes in contract asset and liability account balances between
periods, and key judgments and estimates. In July 2015, the effective date for IFRS 15 was deferred to apply to annual
periods beginning on or after January 1, 2018; early application is permitted either following a full retrospective approach or a
modified retrospective approach. The modified retrospective approach allows the standard to be applied to existing contracts
beginning the initial period of adoption and restatements to the comparative periods are not required. The Company is
required to disclose the impact by financial line item as a result of the adoption of the new standard. The Company intends to
adopt IFRS 15 in its consolidated financial statements for the annual period beginning January 1, 2018. The extent of the
impact of adoption of IFRS 15 has not yet been determined.

Financial Instruments – Recognition and Measurement

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments with a mandatory effective date of January 1,
2018. The new standard brings together the classification and measurement, impairment and hedge accounting phases of the
IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement. In addition to the new requirements for
classification and measurement of financial assets, a new general hedge accounting model and other amendments issued in
previous versions of IFRS 9, the standard also introduces new impairment requirements that are based on a forward-looking
expected credit loss model. The Company intends to adopt IFRS 9 in its consolidated financial statements for the annual
period beginning January 1, 2018. The extent of the impact of the adoption of IFRS 9 has not yet been determined.

The disclosure requirements in IFRS 7 Financial Instruments - Disclosure have also been amended to include the additional
disclosure required under IFRS 9. The Company intends to adopt these amendments to IFRS 7 at the same time as adoption
of IFRS 9. The extent of the impact of the adoption of the amendments to IFRS 7 has not yet been determined.

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

Leases

In January 2016, the IASB issued IFRS 16 Leases with a mandatory effective date of January 1, 2019. The new standard will
replace IAS 17 Leases and will carry forward the accounting requirements for lessors. IFRS 16 provides a new framework for
lessee accounting that requires substantially all assets obtained through operating leases to be capitalized and a related
liability to be recorded. The new standard seeks to provide a more accurate picture of a Company's leased assets and related
liabilities and create greater comparability between companies who lease assets and those who purchase assets. The
Company intends to adopt IFRS 16 in its consolidated financial statements for the annual period beginning January 1, 2019.
The extent of the impact of the adoption of IFRS 16 has not yet been determined.

DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

The Company’s disclosure controls and procedures are designed to provide reasonable assurance that material information
relating to the Company, including its consolidated subsidiaries, is accumulated and communicated to Management in a timely
manner so that information required to be disclosed by the Company under securities legislation is recorded, processed,
summarized and reported within the time periods specified in applicable securities legislation. The Company’s Management,
under the direction and supervision of the Company’s Chief Executive Officer and Chief Financial Officer, is also responsible
for establishing and maintaining internal control over financial reporting. These controls are designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with IFRS.

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated, or caused to be evaluated under their
supervision, the effectiveness of the Company’s internal control over financial reporting and disclosure controls and
procedures as at December 31, 2015, and have concluded that such controls and procedures are effective. There have been
no changes in the Company’s internal control over financial reporting that occurred during the period beginning on January 1,
2015, and ended on December 31, 2015, that have materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting. On January 1, 2014, the Company adopted the Committee of Sponsoring
Organizations new internal control framework, which did not have a material impact on the Company’s internal controls over
financial reporting and disclosure controls and procedures.

NON-IFRS FINANCIAL MEASURES

The Company uses the following non-IFRS measures: Adjusted Operating Earnings, Adjusted Earnings per Share, Adjusted
EBITDA, Net Cash (Debt), and Return on Net Assets. Management believes that these non-IFRS measures provide useful
information to investors in measuring the financial performance of the Company for the reasons outlined below. These
measures do not have a standardized meaning prescribed by IFRS and therefore they may not be comparable to similarly
titled measures presented by other publicly traded companies and should not be construed as an alternative to other financial
measures determined in accordance with IFRS.

Adjusted Operating Earnings

Adjusted Operating Earnings, a non-IFRS measure, is used by Management to evaluate financial operating results. It is
defined as earnings before income taxes from continuing operations adjusted for items that are not considered representative
of ongoing operational activities of the business and items where the economic impact of the transactions will be reflected in
earnings in future periods when the underlying asset is sold or transferred. The table below provides a reconciliation of net
earnings as reported under IFRS in the audited consolidated statements of earnings to Adjusted Operating Earnings for the
years ended, as indicated below. Management believes that this basis is the most appropriate on which to evaluate operating
results, as they are representative of the ongoing operations of the Company.

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

December 31, 2015

Meat
Products
Group

Agribusiness
Group

Non-allocated
costs

Consolidated

(884)

15,321

(275)

—

3,058

18,504

$ 41,580

11,071

$ 52,651

4,711

1,899

33,825

$ 108,440

$ 1,360

$ (16,714)

$ 93,086

—

12,778

3,936

12,778

3,936

$ 108,440

$ 1,360

—

$ 109,800

($ thousands)

Net earnings from continuing operations

Income taxes
Earnings before income taxes
from continuing operations

Interest expense and other financing costs

Other (income) expense

Restructuring and other related costs
Earnings (loss) from continuing operations
Decrease (increase) in fair value of biological assets(i)
Unrealized (gain) loss on futures contracts(ii)
Adjusted Operating Earnings

(i) Refer to Note 7 of the Company’s 2015 audited consolidated financial statements for further details regarding biological

assets.

(ii) Unrealized gains/losses on futures contracts are reported within cost of goods sold in the Company’s 2015 audited

consolidated financial statements.

($ thousands)
Net loss from continuing operations

Income taxes
Loss before income taxes

from continuing operations

Interest expense and other financing costs

Change in the fair value of non-designated

interest rate swaps

Other (income) expense

December 31, 2014

Meat
Products
Group

Agribusiness
Group

Non-allocated
costs

Consolidated

$ (213,813)

(74,556)

$ (288,369)

126,874

(2,492)

16,791

67,592

4,462

37,237

$ (80,381)

—

(1,313)

—

$ 8,642

—

13,642

30,355

$ (7,865)

$ (79,604)

(530)

(4,087)

8,734

(530)

(4,087)

8,734

$ (80,381)

$ 8,642

$ (3,748)

$ (75,487)

(i) Refer to Note 7 of the Company’s 2015 audited consolidated financial statements for further details regarding biological

assets.

(ii) Unrealized gains/losses on futures contracts are reported within cost of goods sold in the Company’s 2015 audited

consolidated financial statements.

(iii) Modification of long-term incentive plan is reported within selling, general and administrative expenses on the Company's

2015 audited consolidated financial statements.

(iv) Figures exclude the results of the Bakery Products Group. The Bakery Products Group results are reported as

discontinued operations as disclosed in Note 22 of the Company’s 2015 audited consolidated financial statements.

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

Adjusted Earnings per Share

Adjusted Earnings per Share, a non-IFRS measure, is used by Management to evaluate financial operating results. It is
defined as basic earnings per share from continuing operations attributable to common shareholders, and is adjusted on the
same basis as Adjusted Operating Earnings. The table below provides a reconciliation of basic earnings per share from
continuing operations as reported under IFRS in the audited consolidated statements of earnings to Adjusted Earnings per
Share for the years ended, as indicated below. Management believes this basis is the most appropriate on which to evaluate
financial results as they are representative of the ongoing operations of the Company.

($ per share)

Basic earnings (loss) per share from continuing operations
Restructuring and other related costs(ii)
Items included in other income not considered representative of ongoing operations(iii)
Change in the fair value of non-designated interest rate swaps(iv)
Change in the fair value of unrealized (gain) loss on futures contracts(iv)
Change in the fair value of biological assets(iv)
Other financing costs(v)
Modification impact to long-term incentive plan(vi)
Adjusted Earnings per Share(vii)

December 31,

2015

$ 0.30

2014(i)
$ (1.51)

0.18

0.02

—

0.02

0.07

—

$ 0.58

0.36
0.08

(0.01)

(0.02)

—

0.50

0.05
$ (0.56)

(i)

(ii)

2014 figures reflect the reclassification of the change in fair value of non-designated interest rate swaps to other income.
Refer to Note 19 of the Company’s 2015 audited consolidated financial statements.

Includes per share impact of restructuring and other related costs, net of tax.

(iii) Primarily includes a depreciation charge on assets servicing divested businesses, interest income and gains/losses

associated with investment properties and assets held for sale, net of tax.

(iv)

(v)

Includes per share impact of the change in fair value of non-designated interest rate swaps, unrealized (gains) losses on
futures contracts and the change in fair value of biological assets, net of tax.

Includes a $76.3 million early repayment premium to lenders, $8.9 million write-off of deferred financing fees, $3.8 million
of financing fees associated with the new credit facility, and a $9.6 million loss transferred from accumulated other
comprehensive income (loss) into earnings due to the settlement of interest rate swaps that are no longer designated as
hedging instruments, net of tax.

(vi) Relates to an $8.7 million modification of long-term incentive compensation plan as a result of the costs being fixed and
payments accelerated, which was a decision made conditional on the sale of Canada Bread, and is therefore not
considered representative of ongoing operational activities of the business, net of tax.

(vii) May not add due to rounding.

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

Adjusted Earnings Before Interest, Tax, Depreciation, and Amortization

Adjusted EBITDA is calculated as earnings from continuing operations before interest and income taxes plus depreciation and
intangible asset amortization, adjusted for items that are not considered representative of ongoing operational activities of the
business, and items where the economic impact of the transactions will be reflected in earnings in future periods when the
underlying asset is sold or transferred. The following table provides a reconciliation of net earnings as reported under IFRS in
the audited consolidated statements of earnings to Adjusted EBITDA for the years ended, as indicated below. Management
believes Adjusted EBITDA is useful in assessing the performance of the Company’s ongoing operations and its ability to
generate cash flows to fund its cash requirements, including the Company’s capital investment program.

($ thousands)

Net earnings (loss) from continuing operations

Income taxes
Earnings (loss) before income taxes from continuing operations
Interest expense and other financing costs
Items included in other income not representative of on-going operations(i)
Restructuring and other related costs

Change in the fair value of non-designated interest rate swaps, biological assets and

unrealized and realized (gains) losses on futures contracts

Modification impact to long-term incentive plan(ii)
Depreciation and amortization

Adjusted EBITDA

December 31,

2015

2014

$ 41,580

$ (213,813)

11,071

(74,556)

$ 52,651

$ (288,369)

4,711

3,058

33,825

16,714

—

108,890

126,874

15,161

67,592

(7,109)

8,734

91,955

$ 219,849

$ 14,838

(i) Primarily includes a depreciation charge on assets servicing divested businesses, interest income and gains/losses

associated with investment properties and assets held for sale.

(ii) Relates to an $8.7 million modification of long-term incentive compensation plan as a result of the costs being fixed and
payments accelerated, which was a decision made conditional on the sale of Canada Bread, and is therefore not
considered representative of ongoing operational activities of the business.

Net Cash (Debt)

The following table reconciles Net Cash (Debt) to amounts reported under IFRS in the Company's audited consolidated
balance sheets for the years ended, as indicated below. The Company calculates Net Cash (Debt) as cash and cash
equivalents, less long-term debt and bank indebtedness. Management believes this measure is useful in assessing the
amount of financial leverage employed.

($ thousands)

Current portion of long-term debt

Long-term debt

Total debt

Cash and cash equivalents

Net Cash (Debt)

Return on Net Assets

December 31,

2015

(813)

(9,843)

2014

(472)

(10,017)

$ (10,656)

$ (10,489)

292,269

$ 281,613

496,328
$ 485,839

RONA is calculated by dividing tax effected earnings from operations (adjusted for items which are not considered
representative of the underlying operations of the business) by average monthly net assets. Net assets are defined as total
assets (excluding cash and deferred tax assets) less non-interest bearing liabilities (excluding deferred tax liabilities).
Management believes that RONA is an appropriate basis upon which to evaluate long-term financial performance.

FORWARD-LOOKING STATEMENTS

This document contains, and the Company’s oral and written public communications often contain, “forward-looking
information” within the meaning of applicable securities law. These statements are based on current expectations, estimates,
forecasts, and projections about the industries in which the Company operates, as well as beliefs and assumptions made by
the Management of the Company. Such statements include, but are not limited to, statements with respect to objectives and

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

goals, in addition to statements with respect to beliefs, plans, objectives, expectations, anticipations, estimates, and intentions.
Specific forward-looking information in this document includes, but is not limited to, statements with respect to: the anticipated
benefits, timing, actions, costs, and investments associated with the Value Creation Plan; expectations regarding the use of
derivatives, futures and options; expectations regarding improving efficiencies; the expected use of cash balances; source of
funds for ongoing business requirements; capital investments and expectations regarding capital expenditures; expectations
regarding the implementation of environmental sustainability initiatives; expectations regarding the adoption of new accounting
standards and the impact of such adoption on financial position; expectations regarding pension plan performance and future
pension plan liabilities and contributions; expectations regarding levels of credit risk; and expectations regarding outcomes of
legal actions. Words such as “expect”, “anticipate”, “intend”, “may”, “will”, “plan”, “believe”, “seek”, “estimate”, and variations of
such words and similar expressions are intended to identify such forward-looking information. These statements are not
guarantees of future performance and involve assumptions and risks and uncertainties that are difficult to predict.

In addition, these statements and expectations concerning the performance of the Company’s business in general are based
on a number of factors and assumptions including, but not limited to: the condition of the Canadian, U.S., and Japanese
economies; the rate of exchange of the Canadian dollar to the U.S. dollar, and the Japanese yen; the availability and prices of
raw materials, energy and supplies; product pricing; the availability of insurance; the competitive environment and related
market conditions; improvement of operating efficiencies whether as a result of the Value Creation Plan or otherwise;
continued access to capital; the cost of compliance with environmental and health standards; no adverse results from ongoing
litigation; no unexpected actions of domestic and foreign governments; and the general assumption that none of the risks
identified below or elsewhere in this document will materialize. All of these assumptions have been derived from information
currently available to the Company, including information obtained by the Company from third-party sources. These
assumptions may prove to be incorrect in whole or in part. In addition, actual results may differ materially from those
expressed, implied, or forecasted in such forward-looking information, which reflect the Company’s expectations only as of the
date hereof.

Factors that could cause actual results or outcomes to differ materially from the results expressed, implied, or forecasted by
forward-looking information include, among other things:

•

risks associated with the Company focusing solely on the protein business;

risks related to the Company's decisions regarding any potential return of capital to shareholders;

risks associated with completing the Value Creation Plan and the risk associated with the concentration of production in
fewer facilities;

risks associated with the availability of capital;

risks associated with changes in the Company’s information systems and processes;

risks posed by food contamination, consumer liability, and product recalls;

risks associated with acquisitions, divestitures, and capital expansion projects;

impact on pension expense and funding requirements of fluctuations in the market prices of fixed income and equity
securities and changes in interest rates;

cyclical nature of the cost and supply of hogs and the competitive nature of the pork market generally;

risks related to the health status of livestock;

impact of a pandemic on the Company’s operations;

the Company’s exposure to currency exchange risks;

ability of the Company to hedge against the effect of commodity price changes through the use of commodity futures and
options;

impact of changes in the market value of the biological assets and hedging instruments;

impact of international events on commodity prices and the free flow of goods;

risks posed by compliance with extensive government regulation;

risks posed by litigation;

impact of changes in consumer tastes and buying patterns;

impact of extensive environmental regulation and potential environmental liabilities;

risks associated with a consolidating retail environment;

risks posed by competition;

MANAGEMENT'S DISCUSSION AND ANALYSIS | 2015 | MAPLE LEAF FOODS INC.

•

risks associated with complying with differing employment laws and practices, the potential for work stoppages due to
non-renewal of collective agreements, and recruiting and retaining qualified personnel;

risks associated with pricing the Company’s products;

risks associated with managing the Company’s supply chain; and

risks associated with failing to identify and manage the strategic risks facing the Company.

The Company cautions the reader that the foregoing list of factors is not exhaustive. These factors are discussed in more
detail under the heading “Risk Factors” presented previously in this document. The reader should review such section in detail.
Some of the forward-looking information may be considered to be financial outlooks for purposes of applicable securities
legislation including, but not limited to, statements concerning future Adjusted EBITDA margins; capital expenditures; and cash
costs. These financial outlooks are presented to allow the Company to benchmark the results of the Value Creation Plan.
These financial outlooks may not be appropriate for other purposes and readers should not assume they will be achieved. The
Company does not intend to, and the Company disclaims any obligation to, update any forward-looking information, whether
written or oral, or whether as a result of new information, future events or otherwise, except as required by law. Additional
information concerning the Company, including the Company’s Annual Information Form, is available on SEDAR at
www.sedar.com.

TABLE OF CONTENTS | 2015 | MAPLE LEAF FOODS INC.

Consolidated Financial Statements

Independent Auditors' Report

Consolidated Balance Sheets

Consolidated Statements of Net Earnings

Consolidated Statements of Other Comprehensive Income (Loss)

Consolidated Statements of Changes in Total Equity

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

Note 1. The Company

Note 2. Basis of Preparation

Note 3. Significant Accounting Policies

Note 4. Cash and Cash Equivalents

Note 5. Accounts Receivable

Note 6. Inventories

Note 7. Biological Assets

Note 8. Property and Equipment

Note 9. Employee Benefits

Note 10. Goodwill

Note 11. Intangible Assets

Note 12. Provisions

Note 13. Long-Term Debt

Note 14. Other Current Liabilities

Note 15. Other Long-Term Liabilities

Note 16. Accumulated Other Comprehensive Income (Loss) Attributable to Common Shareholders

Note 17. Share Capital

Note 18. Financial Instruments and Risk Management Activities

Note 19. Other Income (Expense)

Note 20. Interest Expense and Other Financing Costs

Note 21. Income Taxes

Note 22. Discontinued Operations

Note 23. Earnings (Loss) Per Share

Note 24. Share-Based Payment

Note 25. Composition of the Company

Note 26. Commitments and Contingencies

Note 27. Related Party Transactions

Note 28. Government Incentives

Note 29. Segmented Financial Information

INDEPENDENT AUDITORS' REPORT | 2015 | MAPLE LEAF FOODS INC.

Independent Auditors' Report

To the Shareholders of Maple Leaf Foods Inc.

We have audited the accompanying consolidated financial statements of Maple Leaf Foods Inc., which comprise the
consolidated balance sheets as at December 31, 2015 and December 31, 2014, the consolidated statements of net earnings,
other comprehensive income (loss), changes in total equity and cash flows for the years then ended, and notes, comprising a
summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance
with International Financial Reporting Standards, and for such internal control as management determines is necessary to
enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our
audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we
consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit
opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position
of Maple Leaf Foods Inc. as at December 31, 2015 and December 31, 2014, and its consolidated financial performance and its
consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards.

Chartered Professional Accountants, Licensed Public Accountants
February 29, 2016
Toronto, Canada

CONSOLIDATED BALANCE SHEETS | 2015 | MAPLE LEAF FOODS INC.

Notes

As at December 31,
2015

As at December 31,
2014

4
5
25
6
7

21
10
11

12
13
21
14

13
9
12
15

16
17

292,269
57,958
103,706
257,671
103,877
14,946
130
830,557
1,082,360
7,336
66,519
10,791
66,911
428,236
138,155
$ 2,630,865

256,473
32,531
813
9,670
29,637
329,124
9,843
203,241
14,622
20,901
577,731

882,770
1,172,864
—

(414)
(2,086)
$ 2,053,134
$ 2,630,865

496,328
60,396
110,209
270,401
105,743
20,157
1,107
$ 1,064,341
1,042,506
3,312
88,162
9,881
74,986
428,236
165,066
$ 2,876,490

275,249
60,443
472
26,614
24,383
387,161
10,017
196,482
17,435
20,899
631,994

936,479
1,228,815
79,652

(226)
(224)
$ 2,244,496
$ 2,876,490

Consolidated Balance Sheets

(In thousands of Canadian dollars)

ASSETS
Current assets

Cash and cash equivalents
Accounts receivable
Notes receivable
Inventories
Biological assets
Prepaid expenses and other assets
Assets held for sale

Property and equipment
Investment property
Employee benefits
Other long-term assets
Deferred tax asset
Goodwill
Intangible assets
Total assets

LIABILITIES AND EQUITY
Current liabilities

Accounts payable and accruals
Provisions
Current portion of long-term debt
Income taxes payable
Other current liabilities

Long-term debt
Employee benefits
Provisions
Other long-term liabilities
Total liabilities

Shareholders’ equity
Share capital
Retained earnings
Contributed surplus
Accumulated other comprehensive income (loss) associated with
continuing operations
Treasury stock
Total shareholders’ equity
Total liabilities and equity

Commitments and contingencies (Note 26)

See accompanying Notes to the Consolidated Financial Statements.

On behalf of the Board:

MICHAEL H. MCCAIN
Director

WILLIAM E. AZIZ
Director

Consolidated Statements of Net Earnings

CONSOLIDATED STATEMENTS OF NET EARNINGS | 2015 | MAPLE LEAF FOODS INC.

Years ended December 31,
(In thousands of Canadian dollars, except share amounts)

Notes

2015

2014

Sales

Cost of goods sold

Gross margin

Selling, general and administrative expenses

Earnings (loss) from continuing operations before the following:

Restructuring and other related costs

Change in fair value of non-designated interest rate swaps

Other income (expense)

Earnings (loss) before interest and income taxes from continuing operations

Interest expense and other financing costs

Earnings (loss) before income taxes from continuing operations

Income taxes expense (recovery)

Earnings (loss) from continuing operations

Earnings (loss) from discontinued operations

Net earnings

Attributed to:

Common shareholders

Non-controlling interest

Earnings (loss) per share attributable to common shareholders:

Basic earnings per share

Diluted earnings per share

Basic earnings (loss) per share from continuing operations

Diluted earnings (loss) per share from continuing operations

Weighted average number of shares (millions)

Basic

Diluted

See accompanying Notes to the Consolidated Financial Statements.

$ 3,292,932

$ 3,157,241

2,911,791

2,938,964

381,141

288,055

93,086

(33,825)

—

(1,899)

57,362

4,711

52,651

11,071

41,580

—

218,277

297,881

(79,604)

(67,592)

2,492

(16,791)

$ (161,495)

126,874

$ (288,369)

(74,556)

$ (213,813)

925,719

41,580

711,906

41,580

—

41,580

0.30

0.29

0.30

0.29

140.2

141.7

709,931

1,975

711,906

5.03

(1.51 )

141.2

CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS) | 2015 | MAPLE LEAF FOODS INC.

Consolidated Statements of Other Comprehensive
Income (Loss)

Years ended December 31,
(In thousands of Canadian dollars)

Net earnings

Other comprehensive income (loss)

2015

2014

$ 41,580

$ 711,906

Actuarial gains and losses that will not be reclassified to profit or loss (Net of tax of $0.2

million; 2014: $17.0 million)

389

$ (50,869)

Items that are or may be reclassified subsequently to profit or loss:

Change in accumulated foreign currency translation adjustment (Net of tax of $0.0

million; 2014: $0.0 million)

Change in unrealized gains and losses on cash flow hedges (Net of tax of $0.7 million;

2014: $1.5 million)

Total items that are or may be reclassified subsequently to profit or loss

Other comprehensive income (loss) from continuing operations

Other comprehensive income (loss) from discontinued operations(i) (Net of tax of $0.0
million; 2014: $1.3 million)

Total other comprehensive income (loss)

Comprehensive income

Attributed to:

Common shareholders

Non-controlling interest

1,769

(557)

(1,957)

(188)

201

4,125

3,568

$ (47,301)

—

201

(569)

$ (47,870)

$ 41,781

$ 664,036

$ 41,781

—

$ 662,305

1,731

(i)

The above amount includes a loss of $3.6 million, net of tax of $1.2 million for the year ended December 31, 2014 relating to
actuarial gains and losses that will not subsequently be re-classified to profit or loss.

See accompanying Notes to the Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL EQUITY | 2015 | MAPLE LEAF FOODS INC.

Consolidated Statements of Changes in Total Equity

Attributable to Common Shareholders

(In thousands of Canadian dollars)

Notes

Share
capital

Retained
earnings

Contributed
surplus

Total
accumulated
other
comprehensive
income (loss)
associated with
continuing
operations

Total
accumulated
other
comprehensive
income (loss)
associated with
assets
held for sale

Treasury
stock

Non-
controlling
interest

Total
equity

Balance at December 31, 2014

$ 936,479 $ 1,228,815 $

79,652 $

Net earnings

Other comprehensive income

(loss)

Dividends declared ($0.32 per

share)

Share-based compensation

expense

Obligation for repurchase of

Repurchase of shares

Issuance of treasury stock

Exercise of stock options

Cash settlement of share based

payment

Shares purchased by RSU trust

—

41,580

389

(44,668)

—

12,870

(3,367)

(9,207)

—

(53,377)

(38,956)

(90,216)

—

3,035

—

(3,860)

(2,306)

—

(1,229)

—

(226) $

—

(188)

—

— $

(224) $

— $2,244,496

—

3,326

—

— (5,188)

—

41,580

201

(44,668)

12,870

(12,574)

— (182,549)

—

(2,840)

3,035

(1,229)

(5,188)

Balance at December 31, 2015

$ 882,770 $ 1,172,864 $

— $

(414) $

— $ (2,086) $

— $2,053,134

Attributable to Common Shareholders

(In thousands of Canadian dollars)

Notes

Share
capital

Retained
earnings

Contributed
surplus

Total
accumulated
other
comprehensive
income (loss)
associated with
continuing
operations

Total
accumulated
other
comprehensive
income (loss)
associated with
assets
held for sale

Treasury
stock

Non-
controlling
interest

Total
equity

Balance at December 31, 2013

$ 905,216 $

602,717 $

79,139 $

(4,593) $

— $ (1,350) $ 60,863 $1,641,992

Net earnings

Reclassification to assets held

for sale

Other comprehensive income

(loss)

Dividends declared ($0.16 per

share)

Share-based compensation

expense

Disposal of business

Issuance of treasury stock

Exercise of stock options

Shares purchased by RSU trust

Modification of share-based

compensation plan
Balance at December 31, 2014

—

31,263

—

709,931

—

(54,083)

(22,656)

—

27,501

—

(1,150)

(10,976)

—

(5,944)

(16,012)

—

799

—

(799)

3,568

2,889

—

1,975

711,906

—

(244)

(47,870)

(3,017)

(25,673)

—

27,501

—

(2,090)

— (59,577)

(61,667)

— 12,126

—

— (11,000)

—

31,263

(11,000)

(21,956)

—

$ 936,479 $ 1,228,815 $

79,652 $

(226) $

— $

(224) $

— $2,244,496

See accompanying Notes to the Consolidated Financial Statements.

Consolidated Statements of Cash Flows

CONSOLIDATED STATEMENTS OF CASH FLOWS | 2015 | MAPLE LEAF FOODS INC.

Years ended December 31,
(In thousands of Canadian dollars)
CASH PROVIDED BY (USED IN) :
Operating activities
Net earnings
Add (deduct) items not affecting cash:

Change in fair value of biological assets
Depreciation and amortization
Share-based compensation
Deferred income taxes
Income tax current
Interest expense and other financing costs
Loss (gain) on sale of long-term assets
Loss (gain) on sale of business
Change in fair value of non-designated derivative financial instruments
Impairment of assets (net of reversals)

Change in net pension liability
Net income taxes paid
Net settlement of financial instruments
Early repayment premium
Interest paid
Change in provision for restructuring and other related costs
Settlement of cash-settled restricted share units
Other
Change in non-cash operating working capital

Cash provided by (used in) operating activities
Financing activities
Dividends paid
Dividends paid to non-controlling interest
Net increase (decrease) in long-term debt
Net drawings (payments) on the credit facility
Exercise of stock options
Repurchase of shares
Payment of financing fees

Cash provided by (used in) financing activities
Investing activities

Additions to long-term assets
Capitalization of interest expense
Adjustment to sale of business
Proceeds from sale of business
Transaction costs
Cash associated with divested business
Proceeds from sale of long-term assets
Purchase of treasury stock

Cash provided by (used in) investing activities
Increase (decrease) in cash and cash equivalents
Net cash and cash equivalents, beginning of period
Net cash and cash equivalents, end of period

See accompanying Notes to the Consolidated Financial Statements.

Notes

2015

2014

41,580

711,906

12,778
123,480
12,870
9,178
1,893
4,711
(10,344)
—
(1,429)
1,907
26,761
(12,735)
—
—
(3,674)
(14,963)
(11,236)
2,519
(23,889)
159,407

(44,668)
—
(125)
—
3,035
(182,549)
(277)
$ (224,584)

$ (147,699)
—
—
—
(64)
—
14,069
(5,188)
$ (138,882)
$ (204,059)
496,328
292,269

(530)
111,375
27,501
(26,533)
59,100
127,660
(718)
(1,000,968)
(10,983)
2,466
18,794
(1,442)
(23,631)
(76,311)
(39,897)
30,409
(21,640)
(5,741)
(243,035)
$ (362,218)

(22,656)
(24,621)
(698,889)
(255,000)
31,263
—
(3,769)
$ (973,672)

$ (259,181)
(5,504)
(468)
1,647,015
(28,227)
(23,011)
10,332
(11,000)
$ 1,329,956
(5,934)
$
502,262
496,328

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

Notes to the Consolidated Financial Statements
(Tabular amounts in thousands of Canadian dollars unless otherwise indicated)
Years ended December 31, 2015 and 2014

1. THE COMPANY

Maple Leaf Foods Inc. (“Maple Leaf Foods” or the “Company”) is a producer of food products under leading brands including
Maple Leaf®, Maple Leaf Prime®, Maple Leaf Natural Selections®, Schneiders®, Schneiders Country Naturals® and Mina™.
The Company's portfolio includes prepared meats, ready-to-cook and ready-to-serve meals and valued-added fresh pork and
poultry. The address of the Company’s registered office is 6985 Financial Dr. Mississauga, Ontario, L5N 0A1, Canada. The
consolidated financial statements of the Company as at and for the year ended December 31, 2015, include the accounts of
the Company and its subsidiaries. The principle activities and composition of the Company are further described in Note 25.
The Company’s results are organized into three segments: Meat Products Group, Agribusiness Group, and Bakery Products
Group. During the year ended December 31, 2014, the operations of the Bakery Products Group were sold (Note 22).

2. BASIS OF PREPARATION

(a) Statement of Compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board (“IASB”) and using the accounting policies described
herein.

The consolidated financial statements were authorized for issue by the Board of Directors on February 29, 2016.

(b) Basis of Measurement

The consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments,
biological assets, defined benefit plan assets, and liabilities associated with certain share-based compensation, which are
stated at fair value. Liabilities associated with employee benefits are stated at actuarially determined present values.

The consolidated financial statements are presented in Canadian dollars, which is the Company’s functional currency.

(d) Disposal of business

The consolidated financial statements have been prepared including the results of businesses that were disposed of during the
prior years up to the date of disposal.

The prior year Consolidated Balance Sheet includes the assets of divested businesses up until the date of sale. From the point
of time when Management determines that the carrying amount of a business will be recovered through a sale transaction
rather than continuing use, the assets and liabilities of that business are presented as assets held for sale, and liabilities
associated with assets held for sale. The Consolidated Statements of Cash Flows include the cash flows of divested business
up to the date of sale. Comparative balance sheet and cash flow information has not been restated to reflect this.

The results of businesses sold have been presented in the Consolidated Statements of Net Earnings and Consolidated
Statements of Other Comprehensive Income (Loss) separately, net of tax. A full statement of earnings for each divested
business is included in Note 22.

(e) Use of Estimates and Judgements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

Long-Lived Assets Valuation

Measurement of Fair Values

Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are
disclosed in Notes 7, 9, 10, 11, and 18.

Nature of Interests in Other Entities

Valuation of Inventory

Biological Assets

Trade Merchandise Allowances and Other Trade Discounts

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

Employee Benefit Plans

Income Taxes

Provisions

Share-Based Compensation

Depreciation and Amortization

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial
statements.

(a) Principles of Consolidation

These consolidated financial statements include the accounts of the Company and its subsidiaries from the date that control
commences until the date that control ceases. Control exists when the Company is exposed to or has rights to variable returns
from its involvement with the entity and has the ability to affect those returns through its power over the entity. Non-controlling
interest represents the portion of a subsidiary’s net earnings and net assets that are attributable to shares of such a subsidiary
not held by the Company. Acquisitions of non-controlling interests are accounted for as transactions with equity holders in their
capacity as equity holders; therefore, no goodwill is recognized as a result of such transactions.

All intercompany accounts and transactions have been eliminated on consolidation.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

(b) Business Combinations and Goodwill

Business combinations are accounted for using the acquisition method at the acquisition date, which is the date that control is
transferred to the Company. In assessing control, the Company takes into consideration potential voting rights that are
currently exercisable.

Goodwill is measured as the excess of the sum of the fair value of the consideration transferred, the amount of any non-
controlling interests in the acquiree, and the fair value of the Company’s previously held equity interest in the acquiree (if any)
over the net of the acquisition-date fair value of the identifiable assets acquired and the liabilities assumed. If the excess is
negative, a purchase gain is recognized immediately in earnings. Transaction costs, other than those associated with the issue
of debt or equity, are recognized in earnings as incurred.

Goodwill is not amortized and is tested for impairment annually in October and as required if events occur that indicate that its
carrying amount may not be recoverable. Goodwill is tested for impairment at the CGU group level by comparing the carrying
amount to its recoverable amount, consistent with the methodology outlined in Note 3(k).

Non-controlling interests that are present ownership interests at the acquisition date, and entitle their holders to a
proportionate share of the entity’s net assets in the event of liquidation, are initially measured either at fair value or at the non-
controlling interests’ proportionate share of the recognized amounts of the acquired business' identifiable assets. The choice of
measurement basis is made on a transaction-by-transaction basis depending on individual factors of the transaction. Other
types of non-controlling interest are measured at fair value or, when applicable, on the basis specified in the applicable IFRS.

Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is
classified as equity, then it is not re-measured and settlement is accounted for in equity. Otherwise, subsequent changes in the
fair value of the contingent consideration are recognized in earnings.

When the initial accounting for a business combination has not been finalized by the end of the reporting period in which the
combination occurs, the Company reports provisional amounts for the items for which the accounting has not been finalized.
These provisional amounts are adjusted during the measurement period, which does not exceed one year from the acquisition
date, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that
existed at the acquisition date that, if known, would have affected the amounts recognized at that date.

The Company measures certain financial and non-financial assets and liabilities at fair value at each balance sheet date. In
addition, fair value measurements are disclosed for certain financial and non-financial assets and liabilities.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. In estimating the fair value of an asset or a liability, the Company takes into
account the characteristics of the asset or liability if market participants would take those characteristics into account when
pricing the asset or liability at the measurement date. Fair value for measurement and disclosure purposes is determined on
such a basis, except for share-based payment transactions, and measurements that have some similarities to fair value but
are not fair value, such as net realizable value or value in use.

Assets and liabilities, for which fair value is measured or disclosed in the financial statements, are classified using a three-level
fair value hierarchy that reflects the significance and transparency of the inputs used in making the fair value measurements.
Each level is based on the following:

Level 1 - inputs are unadjusted quoted prices of identical assets or liabilities in active markets

Level 2 - inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly

or indirectly

Level 3 - one or more significant inputs used in a valuation technique are unobservable in determining fair values of

the asset or liability

Determination of fair value and the resulting hierarchy requires the use of observable market data whenever available. The
classification of an asset or liability in the hierarchy is based upon the lowest level of input that is significant to the
measurement of fair value.

(d) Non-current Assets (or Disposal Groups) Held for Sale and Discontinued Operations

The Company classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered
principally through a sale transaction rather than through continuing use. The criteria for held for sale classification is regarded
as met when a sale is highly probable, the asset or disposal group is available for immediate sale in its present condition, and
management is committed to the sale, which is expected to be completed within one year from the date of classification. Non-
current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value
less costs to sell. Non-current assets are not depreciated once classified as held for sale.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

A discontinued operation is a component of the Company’s business which can be clearly distinguished from the rest of the
Company, both operationally and for financial reporting purposes. Classification as a discontinued operation occurs at the
earlier of disposal or when the operation meets the criteria to be classified as held for sale. When an operation is classified as
a discontinued operation, the comparative statements of net earnings and other comprehensive income (loss) are re-
presented as if the operation has been discontinued from the start of the comparative year. Discontinued operations are
excluded from the results of continuing operations and are presented as a single amount net of tax as net earnings (loss) from
discontinued operations in the statements of net earnings.

(e) Translation of Foreign Currencies

The accounts of the Company are presented in Canadian dollars. Transactions in foreign currencies are translated at the
actual rates of exchange. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated
to the Canadian dollar at the exchange rate for that date. Foreign exchange differences arising on translation are recognized in
net earnings, except for financial assets and liabilities designated as hedges of the net investment in foreign operations or
qualifying cash flow hedges, which are recognized in other comprehensive income (loss). Non-monetary assets and liabilities
that are measured at historical cost are translated using the exchange rate at the date of the transaction.

The financial statements of foreign subsidiaries whose unit of measure is not the Canadian dollar are translated into Canadian
dollars using the exchange rate in effect at the period-end for assets and liabilities, and the average exchange rates for the
period for revenue, expenses, and cash flows. Foreign exchange differences arising on translation are recognized in
accumulated other comprehensive income (loss) in total equity.

When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost,
the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the
gain or loss on disposal. If the Company disposes of part of its interest in a subsidiary but retains control, then the relevant
proportion of the cumulative amount is reattributed to the non-controlling interest. When the Company disposes of only part of
an associate or joint venture while retaining significant influence or joint control, the relevant proportion of the cumulative
amount is reclassified to net earnings.

Foreign exchange gains and losses arising from a receivable or payable to a foreign operation, the settlement of which is
neither planned nor likely to occur in the foreseeable future and which in substance is considered to form part of the net
investment in the foreign operations, are recognized in other comprehensive income (loss) in the cumulate foreign currency
translation differences.

(f) Financial Instruments

The Company’s financial assets and financial liabilities, upon initial recognition, are measured at fair value and are classified
as held for trading, loans and receivables, or other financial liabilities. The classification depends on the purpose for which the
financial instruments were acquired and their characteristics. Held for trading is the required classification for all derivative
financial instruments unless they are specifically designated within an effective hedge relationship. Held for trading financial
instruments not designated within an effective hedging relationship are measured at fair value with changes in fair value
recognized in consolidated statements of net earnings in the period in which such changes arise. Loans and receivables and
other financial liabilities are initially recorded at fair value and are subsequently measured at amortized cost.

Financial assets are assessed at each reporting date to determine whether there is any objective evidence of impairment. A
financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect
on the estimated future cash flows of that asset, with impairment losses recognized in the consolidated statements of net
earnings. If, in a subsequent period, the impairment loss decreases, the previously recognized impairment is reversed to the
extent of the impairment.

Transaction costs, other than those related to financial instruments classified as fair value through profit or loss, which are
expensed as incurred, are capitalized to the carrying amount of the instrument and amortized using the effective interest
method.

(g) Hedge Accounting

The Company uses derivatives and other non-derivative financial instruments to manage its exposures to fluctuations in
interest rates, foreign exchange rates, and commodity prices.

At the inception of a hedging relationship, the Company designates and formally documents the relationship between the
hedging instrument and the hedged item, the risk management objective, and its strategy for undertaking the hedge. The
documentation identifies the specific asset, liability, or anticipated cash flows being hedged, the risk that is being hedged, the
type of hedging instrument used, and how effectiveness will be assessed.

The Company also formally assesses both at inception and at least quarterly thereafter, whether or not the derivatives that are
used in hedging transactions are highly effective in offsetting the changes attributable to the hedged risks in the fair values or

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

cash flows of the hedged items. If a hedge relationship becomes ineffective, it no longer qualifies for hedge accounting and
any subsequent change in the fair value of the hedging instrument is recognized in net earnings.

When hedge accounting is appropriate, the hedging relationship is designated as a cash flow hedge, a fair value hedge, or a
hedge of foreign currency exposure of a net investment in a self-sustaining foreign operation. In a cash flow hedge, the
change in fair value of the hedging instrument is recorded, to the extent it is effective, in other comprehensive income until the
hedged item affects net earnings. In a fair value hedge, the change in fair value of the hedging derivative is offset in the
consolidated statements of net earnings by the change in fair value of the hedged item relating to the hedged risk.

In a net investment hedge, the change in fair value of the hedging instrument is recorded, to the extent effective, directly in
other comprehensive income (loss). These amounts are recognized in earnings when the corresponding accumulated other
comprehensive income (loss) from self-sustaining foreign operations is recognized in net earnings. The Company had
previously designated certain U.S. dollar-denominated notes payable as net investment hedges of U.S. operations that were
disposed of during the year ended December 31, 2014.

Hedge ineffectiveness is measured and recorded in current period earnings in the consolidated statements of net earnings.
When either a fair value hedge or cash flow hedge is discontinued, any cumulative adjustment to either the hedged item or
other comprehensive income (loss) is recognized in net earnings, as the hedged item affects net earnings, or when the
hedged item is derecognized. If a designated hedge is no longer effective, the associated derivative instrument is
subsequently carried at fair value through net earnings without any offset from the hedged item.

Derivatives that do not qualify for hedge accounting are carried at fair value on the consolidated balance sheets, and
subsequent changes in their fair value are recorded in the consolidated statements of net earnings.

(h) Cash and Cash Equivalents

Cash and cash equivalents are comprised of cash balances and demand deposits.

(i)

Inventories

Inventories are valued at the lower of cost and net realizable value, with cost being determined substantially on a first-in, first-
out basis. The cost of inventory includes direct product costs, direct labour, and an allocation of variable and fixed
manufacturing overhead, including depreciation. When circumstances that previously caused inventories to have a write-down
below cost no longer exist, or when there is clear evidence of an increase in the net realizable value, the amount of a write-
down previously recorded is reversed through cost of goods sold.

(j) Biological Assets

Biological assets consist of live hogs, poultry, and eggs. For the purposes of valuation, these assets are categorized as either
parent stock or commercial stock. Parent stock represents animals held and bred for the purpose of generating commercial
stock and to replace parent stock nearing the end of its productive cycle. Commercial stock is held for the purposes of further
processing or eventual sale, at which point it becomes inventory. The fair value of commercial stock is determined based on
market prices of livestock of similar age, breed, and generic merit, less costs to sell the assets, including estimated costs
necessary to transport the assets to market. Where reliable market prices of parent stock are not available, they are valued at
cost less accumulated depreciation and any accumulated impairment losses. No active liquid market exists for parent stock as
they are rarely sold. Hog parent stock is depreciated on a straight-line basis over two to three years after taking into account
residual values, whereas poultry parent stock is depreciated on a straight-line basis over six to eight months.

Biological assets are transferred into inventory at fair value less costs to sell at the point of delivery.

(k)

Impairment or Disposal of Long-Lived Assets

The Company reviews long-lived assets or asset groups held and used, including property and equipment and intangible
assets subject to amortization, for recoverability whenever events or changes in circumstances indicate that their carrying
amount may not be recoverable. Asset groups referred to as CGUs include an allocation of corporate assets and are reviewed
at their lowest level for which identifiable cash inflows are largely independent of cash inflows of other assets or groups of
assets. The recoverable amount is the greater of its value in use and its fair value less cost to sell.

Value in use is based on estimates of discounted future cash flows expected to be recovered from a CGU through its use.
Management develops its cash flow projections based on past performance and its expectations of future market and business
developments. Once calculated, the estimated future pre-tax cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Fair value less cost to sell is the amount obtainable from the sale of an asset or CGU in an arm’s-length transaction between
knowledgeable, willing parties, less the costs of disposal. Costs of disposal are incremental costs directly attributable to the
disposal of an asset or CGU, excluding financing costs and income tax expense.

An impairment loss is recognized in the consolidated statements of net earnings when the carrying amount of any asset or its
CGU exceeds its estimated recoverable amount. Impairment losses recognized in respect of CGUs are allocated, first to

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the net carrying amount of the other
assets in the CGU on a pro rata basis.

Impairment losses related to long-lived assets recognized in prior periods are assessed at each reporting date for any
indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation and amortization,
if no previous impairment loss had been recognized.

(l) Property and Equipment

Property and equipment, with the exception of land, is recorded at cost less accumulated depreciation and any net
accumulated impairment losses. Land is carried at cost and not depreciated. For qualifying assets, cost includes interest
capitalized during the construction or development period. Construction-in-process assets are capitalized during construction
and depreciation commences when the asset is available for use. Depreciation related to assets used in production is
recorded in inventory and cost of goods sold. Depreciation related to non-production assets is recorded through selling,
general, and administrative expense. Depreciation is calculated on a straight-line basis, after taking into account residual
values, over the following expected useful lives of the assets:

___________________________________________________________________________________________________

Buildings, including other components
Machinery and equipment
____________________________________________________________________________________________________

10-40 years
3-20 years

When parts of an item of property and equipment have different useful lives, those components are accounted for as separate
items of property and equipment.

(m) Investment Property

Investment property is comprised of properties owned by the Company that are held to either earn rental income or for capital
appreciation, or both. The Company’s investment properties include land and buildings.

Investment properties are recorded at cost less accumulated depreciation and any accumulated impairment losses, with the
exception of land which is recorded at cost less any accumulated impairment losses. The depreciation policies for investment
properties are consistent with those for buildings.

(n)

Intangible Assets

Intangible assets include computer software, trademarks, customer relationships, poultry production quota, and delivery
routes. Definite life intangible assets are measured at cost less accumulated amortization and any net accumulated
impairment losses. Amortization is recognized in the consolidated statements of earnings on a straight-line basis over their
estimated useful lives as follows:

____________________________________________________________________________________________________

Trademarks
Computer software
Customer relationships
____________________________________________________________________________________________________

10 years
3-10 years
20-25 years

Indefinite life intangibles including trademarks, poultry production quota, and delivery routes are tested for impairment annually
in the fourth quarter and otherwise as required if events occur that indicate that the net carrying value may not be recoverable.

Upon recognition of an intangible asset, the Company determines if the asset has a definite or indefinite life. In making this
determination, the Company considers the expected use, expiry of agreements, the nature of the asset, and whether the value
of the asset decreases over time.

(o) Employee Benefit Plans

The Company provides post-employment benefits through defined benefit and defined contribution plans.

Defined Benefit Plans

The Company accrues obligations and costs in respect of employee defined benefit plans. The cost of pensions and other
retirement benefits earned by employees is actuarially determined using the projected unit credit method prorated on service
and Management's best estimate of salary escalation, retirement ages of employees, mortality rates, and expected health care
costs. Changes in these assumptions could affect future pension expense. The fair value of plan assets and the present value
of the obligation are used to calculate net interest cost or income. The discount rate used to value the defined benefit

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

obligation is based on high-quality corporate bonds in the same currency in which the benefits are expected to be paid and
with terms to maturity that, on average, match the terms of the defined benefit obligations.

Actuarial gains and losses due to changes in defined benefit plan assets and obligations are recognized immediately in
accumulated other comprehensive income (loss).

When the calculation results in a net benefit asset, the recognized asset is limited to the total of any unrecognized past service
costs and the present value of economic benefits available in the form of future refunds from the plan or reductions in future
contributions to the plan (the “asset ceiling”). In order to calculate the present value of economic benefits, consideration is
given to minimum funding requirements that apply to the plan. Where it is anticipated that the Company will not be able to
recover the value of the net defined benefit asset, after considering minimum funding requirements for future services, the net
defined benefit asset is reduced to the amount of the asset ceiling. The impact of the asset ceiling is recognized in other
comprehensive income (loss).

When future payment of minimum funding requirements related to past service would result in a net defined benefit asset
“surplus” or an increase in a surplus, the minimum funding requirements are recognized as a liability, to the extent that the
surplus would not be fully available as a refund or a reduction in future contributions. Re-measurement of this liability is
recognized in other comprehensive income (loss) in the period in which the re-measurement occurs.

Defined Contribution Plans

The Company’s obligations for contributions to employee defined contribution pension plans are recognized in the
consolidated statement of net earnings in the periods during which services are rendered by employees.

Multi-Employer Plans

The Company participates in multi-employer pension plans which are accounted for as defined contribution plans. The
Company does not administer these plans as the administration and the investment of these assets are controlled by a board
of trustees consisting of union and employer representatives. The Company’s responsibility to make contributions to these
plans is established pursuant to collective bargaining agreements. The contributions made by the Company to the multi-
employer plans are expensed when due.

(p) Share-Based Compensation

The Company applies the fair value method of accounting for share-based compensation. The fair value at grant date of stock
options is estimated using the Black-Scholes option-pricing model. The fair value of restricted share units (“RSUs”), including
performance share units (“PSUs”), is measured based on the fair value of the underlying shares on the grant date.
Compensation cost is recognized on a straight-line basis over the expected vesting period of the share-based compensation.
The Company estimates the number of units expected to vest at the grant date and revises the estimate as necessary if
subsequent information indicates that the actual number of units vesting differs significantly from the original estimate. The fair
value of deferred share units (“DSUs”) is measured based on the fair value of the underlying shares at each reporting date.

The Company has share-based compensation plans which are able to be settled in either cash or equity instruments at the
option of the Company. Each grant is accounted for based on the expected settlement method at the time of issue. The
expectation is re-evaluated at the end of each reporting period.

(q) Provisions

Provisions are liabilities of the Company for which the amount and/or timing of settlement is uncertain. A provision is
recognized in the consolidated financial statements when the Company has a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the
effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and, when appropriate, the risks specific to the liability.

(r) Revenue Recognition

The majority of the Company’s revenue is derived from the sale of product to retail and foodservice customers, as well as the
sale of by-products to industrial and agricultural customers. The Company recognizes revenue from product sales at the fair
value of the consideration received or receivable, net of estimated returns, and an estimate of sales incentives provided to
customers. Revenue is recognized when the customer takes ownership of the product, title has transferred, all the risks and
rewards of ownership have transferred to the customer, recovery of the consideration is probable, the Company has satisfied
its performance obligations under the arrangement, and has no ongoing involvement with the sold product. The value of sales
incentives provided to customers are estimated using historical trends and are recognized at the time of sale as a reduction of
revenue. Sales incentives include rebate and promotional programs provided to the Company's customers. These rebates are
based on achievement of specified volume or growth in volume levels and other agreed promotional activities. In subsequent
periods, the Company monitors the performance of customers against agreed upon obligations related to sales incentive
programs and makes any adjustments to both revenue and sales incentive accruals as required.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

The Company generally does not accept returns of spoiled products from customers. For product that may not be returned, the
Company, in certain cases, provides customers with allowances to cover any damage or spoilage, and such allowances are
deducted from sales at the time of revenue recognition.

(s) Borrowing Costs

Borrowing costs are primarily comprised of interest on the Company's indebtedness. Borrowing costs are capitalized when
they are attributable to the acquisition, construction, or production of a qualifying asset. The Company defines qualifying
assets as any asset that requires more than six months to prepare for its intended use. Borrowing costs attributable to
qualifying assets are calculated using the Company’s average borrowing cost excluding the costs associated with the de-
recognition of accounts receivables under securitization programs. Borrowing costs that are not attributable to a qualifying
asset are expensed in the period in which they are incurred and reported within interest expense in the consolidated statement
of net earnings.

(t) Government Incentives

Government incentives are not recognized until there is reasonable assurance that they will be received and that the Company
will be in compliance with any conditions associated with the incentives. Incentives that compensate the Company for
expenses or losses are recognized in earnings with the same classification as the related expense or loss in the same periods
in which the expenses or losses are recognized.

Government incentives received with the primary condition that the Company should purchase, construct, or otherwise acquire
non-current assets are recognized as a deduction from the associated asset on the consolidated balance sheet. The incentive
is recognized in earnings over the useful life of the asset as a reduction of the related depreciation expense.

Government incentives that are receivable as compensation for expenses or losses already incurred, or for the purpose of
giving immediate financial support to the Company with no future related costs, are recognized in earnings in the period in
which they become receivable.

The benefit of a government loan at a below-market rate of interest is treated as a government incentive, and is measured as
the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.

(u)

Income Taxes

Income tax expense is comprised of current and deferred tax. Income tax is recognized in the consolidated statement of net
earnings, except to the extent that it relates to a business combination, or items recognized directly in equity or in other
comprehensive income (loss).

Current tax expense represents the amount of income taxes payable, in respect of the taxable profit for the period, based on
tax law that is enacted or substantially enacted at the reporting date, and is adjusted for changes in estimates of tax expense
recognized in prior periods. A current tax liability or asset is recognized for income tax payable, or paid but recoverable in
respect of all periods to date.

The Company uses the asset and liability method of accounting for income taxes. Accordingly, deferred tax assets and
liabilities are recognized for the deferred tax consequences attributable to differences between the financial statement carrying
amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted
or substantively enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. In addition, the effect on deferred tax assets and liabilities of a change in tax rates is
recognized in both net earnings and comprehensive income in the period in which the enactment or substantive enactment
takes place.

A deferred tax asset is recognized for unused tax losses, tax credits, and deductible temporary differences, to the extent that it
is probable that future taxable income will be available to utilize such amounts. Deferred tax assets are reviewed at each
reporting date and are adjusted to the extent that it is no longer probable that the related tax benefits will be realized.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the
Company intends to settle its current tax assets and liabilities on a net basis.

Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the
reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not
reverse in the foreseeable future.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

(v) Accounting Standards Adopted During the Period

Employee Benefits

Annual Improvements to IFRS (2010 – 2012) and (2011 – 2013) Cycles

(w) Accounting Pronouncements Issued But Not Yet Effective

Annual Improvements to IFRS (2012-2014) Cycle

Joint Arrangements

Consolidated Financial Statements and Investments in Associates and Joint Ventures

Revenue Recognition

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

periods beginning on or after January 1, 2018; early application is permitted either following a full retrospective approach or a
modified retrospective approach. The modified retrospective approach allows the standard to be applied to existing contracts
beginning the initial period of adoption and restatements to the comparative periods are not required. The Company is
required to disclose the impact by financial line item as a result of the adoption of the new standard. The Company intends to
adopt IFRS 15 in its consolidated financial statements for the annual period beginning January 1, 2018. The extent of the
impact of adoption of IFRS 15 has not yet been determined.

Financial Instruments – Recognition and Measurement

Leases

4. CASH AND CASH EQUIVALENTS

As at December 31, 2015, the Company had agreements to cash collateralize certain of its letters of credit up to an amount of
$120.0 million (2014: $120.0 million), of which $83.9 million (2014: $85.8 million) was deposited with a major financial
institution.

5. ACCOUNTS RECEIVABLE

Trade receivables

Less: Allowance for doubtful accounts

Net trade receivables

Other receivables:

Commodity taxes receivable

Interest rate swap receivable

Government receivable

Other

The aging of trade receivables is as follows:

Current

Past due 0-30 days

Past due 31-60 days

Past due > 60 days

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

As at December 31,

2015

2014

$ 25,537

$ 20,498

(5)

(4)

$ 25,532

$ 20,494

8,972

435

11,890

11,129

9,539

2,308

16,583

11,472

$ 57,958

$ 60,396

As at December 31,

2015

$ 16,295

9,070

161

2014

$ 16,875

3,623

—

$ 25,537

$ 20,498

The Company maintains an allowance for doubtful accounts that represents its estimate of the uncollectible amounts based on
specific losses estimated on individual exposures.

The Company has sold certain of its trade accounts receivables under securitization programs as described in Note 25. The
Company's securitization programs require the sale of trade receivables to be treated as a sale from an accounting
perspective and as a result, trade receivables sold under these programs are derecognized in the consolidated balance sheets
as at December 31, 2015 and 2014.

6. INVENTORIES

Raw materials

Work in process

Finished goods

Packaging

Spare parts

As at December 31,

2015

2014

$ 28,237

$ 31,345

17,367

165,522

15,856

30,689

19,502

169,103

22,083

28,368

$ 257,671

$ 270,401

For the year ended December 31, 2015, inventory in the amount of $2,567.0 million (2014: $2,509.4 million) was expensed
through cost of goods sold.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

7. BIOLOGICAL ASSETS

Hog stock

Poultry stock

Commercial

Parent

Commercial

Balance at December 31, 2014

$ 81,049

$ 19,777

3,234

Additions and purchases

Depreciation

Change in fair value realized

Change in fair value unrealized

Further processing and sales

238,128

—

(11,110)

(1,668)

(230,684)

6,903

(4,030)

—

50,871

—

(50,366)

Parent

1,683

2,494

(2,404)

—

Total

$ 105,743

298,396

(6,434)

(11,110)

(1,668)

(281,050)

Balance at December 31, 2015

$ 75,715

$ 22,650

3,739

1,773

$ 103,877

Hog stock

Poultry stock

Commercial

Parent

Commercial

Balance at December 31, 2013

$ 73,345

$ 17,748

3,112

Additions and purchases

Depreciation

Change in fair value realized

Change in fair value unrealized

Further processing and sales

254,382

—

(10,580)

11,110

(247,208)

5,980

(3,951)

—

47,286

—

(47,164)

Parent

1,535

2,356

(2,208)

—

Total

$ 95,740

310,004

(6,159)

(10,580)

11,110

(294,372)

Balance at December 31, 2014

$ 81,049

$ 19,777

3,234

1,683

$ 105,743

Hog stock is comprised of approximately 0.8 million animals as at December 31, 2015 (2014: 0.8 million). During the years
ended December 31, 2014 and 2015, substantially all hog stock was directly transferred to the Company's primary processing
operations.

Poultry stock is comprised of approximately 7.6 million eggs and 0.2 million birds as at December 31, 2015 (2014: 6.7 million
eggs and 0.2 million birds).

The change in fair value of commercial hog and poultry stock for the year was a loss of $12.8 million for the year ended
December 31, 2015 (2014: gain of $0.5 million) recorded in cost of goods sold.

The fair value measures of commercial hog stock have been categorized as a Level 3 fair value based on inputs to the
valuation techniques used. There were no transfers between levels for the year ended December 31, 2015.

The Company uses the market comparison approach to determine the fair value of its commercial hog stock. The valuation
model is based on the market price of hog stock of similar age, weight, breed, and genetic make-up. The model is based on
the U.S. dollar market price per cut weight and adjusted for foreign exchange, conversion from pounds to kilograms, and
specific significant unobservable inputs, including a quality index adjustment and a market conversion factor, as defined below.

The quality index adjustment is a value adjustment based on the relative quality of a processed hog based on the lean yield
(being the ratio between muscle and fat content) and total weight. Quality adjustments range from 6.7% to 7.7%. A higher
(lower) quality adjustment percentage will result in an increase (decrease) to the fair market value of the commercial hog
stock.

The market conversion factor is a market adjustment used to discount the formula from a U.S. market price to a Canadian
pricing model. The market conversion factor experiences minimal fluctuation. A higher (lower) market conversion factor will
result in an increase (decrease) to the fair market value of the commercial hog stock.

Commercial poultry stock are valued at cost as an indicator of fair value in the case where little biological transformation has
taken place since initial cost occurrence or when the impact of the biological transformation on price is not expected to be
material.

Where reliable market prices of parent stock are not available, they are valued at cost less accumulated depreciation and any
accumulated impairment losses. No active liquid market exists for parent stock as they are rarely sold.

The Company has established environmental policies and procedures which comply with local environmental and other laws.
Management performs regular reviews to identify environmental risks and to ensure that the systems in place are adequate to
manage those risks.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

The Company's biological asset operations can be affected by outbreaks of disease among livestock. To mitigate this risk, the
Company monitors herd health status and has strict bio-security procedures and employee training programs throughout its
livestock production operation.

8. PROPERTY AND EQUIPMENT

Cost

Land

Buildings

Machinery
and
equipment

Under
construction

Total

Balance at December 31, 2014

38,081

$ 745,204

$ 1,093,872

28,354

$ 1,905,511

Additions

Disposal of property and equipment

Transfers from under construction

Transfers to investment properties

Foreign currency translation

Balance at December 31, 2015

—

(667)

1,249

(4,772)

—

(304)

34,102

(20,552)

—

140,026

(161,353)

—

(162,324)

64,932

(100,283)

(97)

—

(25,421)

105

33,891

$ 758,492

$ 997,417

68,097

$ 1,857,897

Accumulated depreciation and impairment

Balance at December 31, 2014

— $ 221,028

$ 641,977

— $ 863,005

Depreciation

Disposal of property and equipment

Impairment

Restructuring related write-downs

Transfers to investment properties

Foreign currency translation

Balance at December 31, 2015

Net at December 31, 2015

—

24,611

66,126

(156)

(159,894)

—

(20,527)

1,907

448

(48)

—

90,737

(160,050)

1,907

448

(20,575)

— $ 224,967

$ 550,570

33,891

$ 533,525

$ 446,847

— $ 775,537

68,097

$ 1,082,360

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

Cost

Land

Buildings

Machinery
and
equipment

Under
construction

Total

Balance at December 31, 2013
Additions(i)
Disposal of property and equipment

Transfers from under construction

Transfers to investment properties

67,653

$ 819,480

$ 1,501,697

308,598

$ 2,697,428

—

(16)

187

(407)

—

208,155

(24,013)

(119,543)

(1,347)

(144,919)

179,431

(21,117)

274,021

(3,544)

(453,639)

—

(25,068)

Transfers to assets held for sale

(29,460)

(210,757)

(566,225)

(39,033)

(845,475)

Interest capitalized

Foreign currency translation

Other

—

124

—

2,180

—

8,072

(606)

5,252

1,132

(764)

5,252

11,508

(1,370)

Balance at December 31, 2014

38,081

$ 745,204

$ 1,093,872

28,354

$ 1,905,511

Accumulated depreciation and impairment

Balance at December 31, 2013

— $ 311,326

$ 1,062,784

— $ 1,374,110

Depreciation

Disposal of property and equipment

Impairment

Reversal of impairment

Restructuring related write-downs

Transfers to investment properties

Transfers to assets held for sale

Foreign currency translation

Other

Balance at December 31, 2014

Net at December 31, 2014

(i) Includes accruals of $1.9 million.

Borrowing Costs

—

24,791

60,575

(23,839)

(118,998)

—

(124)

8,056

(21,111)

(78,794)

723

—

1,557

—

12,175

(3,353)

(377,506)

5,349

(606)

—

85,366

(142,837)

1,557

(124)

20,231

(24,464)

(456,300)

6,072

(606)

— $ 221,028

$ 641,977

38,081

$ 524,176

$ 451,895

— $ 863,005

28,354

$ 1,042,506

For the year ended December 31, 2015, there were no borrowing costs capitalized (2014: $5.2 million, using an average
capitalization rate of 6.7%).

9. EMPLOYEE BENEFITS

The Company sponsors several defined benefit pension plans for Canadian employees which are either final salary plans,
career salary plans, service based plans, or a combination thereof. The Company also sponsors a final salary defined benefit
pension plan in the U.K. in which membership is closed. These defined benefit plans require contributions to be made to
separately administered funds. Certain retired employees are covered under a post-retirement benefit plan, which reimburses
certain medical costs and provides life insurance coverage.

The Canadian plans are governed by the pension laws of the province in which the respective plan is registered. The U.K. plan
is governed by the employment laws of the U.K.

The Company's pension funding policy is to contribute amounts sufficient, at a minimum, to meet local statutory funding
requirements. For the Company's defined benefit pension plans, local regulatory bodies either define minimum funding
requirements or approve funding plans submitted by the Company. From time to time the Company may make additional
discretionary contributions taking into account actuarial assessments and other factors. The contributions that have been
made to support ongoing plan obligations have been recorded in the respective asset or liability accounts on the consolidated
balance sheet. Actuarial valuations for the Company's defined benefit pension plans are completed based on the regulations in
place in the jurisdictions where the plans operate.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

Information about the Company's defined benefit plans as at December 31, in aggregate, is as follows:

Other post-

retirement

Other post-

2015

retirement

benefits

Pension

Total

benefits

Pension

2014

Total

Accrued benefit obligation:

Balance, beginning of year

60,369 $ 1,163,748 $ 1,224,117 $

57,462 $ 1,201,340 $ 1,258,802

Current service cost

Interest cost

Benefits paid from plan assets

Benefits paid directly from the

Company

Actuarial (gains) losses - experience

Actuarial (gains) losses -

demographic experience

Actuarial (gains) losses - financial

assumptions

Employee contributions

Plan amendments

Special termination benefits

Curtailments

Settlements

Transfer to assets held for sale

112

2,191

13,688

42,988

13,800

45,179

147

2,447

13,340

47,517

13,487

49,964

—

(71,376)

—

(69,165)

(3,530)

(603)

(1,464)

1,435

(4,994)

832

(3,315)

(675)

(1,412)

1,645

(4,727)

970

—

3,522

—

1,131

(109)

(7,231)

—

3,522

—

1,131

(109)

(7,231)

1,447

20,019

21,466

4,354

103,012

107,366

—

3,616

540

590

(1,030)

(296)

3,616

540

590

(1,030)

(296)

—

(1,498)

(155,968)

(157,466)

Balance, end of year

58,539 $ 1,146,332 $ 1,204,871 $

60,369 $ 1,163,748 $ 1,224,117

Unfunded
Funded(i)
Total obligation
(i) Includes wholly and partially funded plans

58,539 $

28,766 $

87,305 $

60,369 $

27,936 $

88,305

— 1,117,566

1,117,566

— 1,135,812

1,135,812

58,539 $ 1,146,332 $ 1,204,871 $

60,369 $ 1,163,748 $ 1,224,117

Plan Assets

Fair value, beginning of year

— $ 1,117,224 $ 1,117,224 $

— $ 1,203,175 $ 1,203,175

Interest income
Actuarial gains (losses)(ii)
Employer contributions

Employee contributions

Benefits paid

Asset transfer to Company defined

contribution plan

Administrative costs

Settlements

Transfer to assets held for sale

Fair value, end of year

Other

Accrued benefit asset (liability), end

—

40,473

1,397

3,781

3,522

1,397

3,781

3,522

(71,376)

(14,351)

(3,024)

(8,386)

—

(3,024)

(8,386)

—

48,057

61,551

6,992

3,616

48,057

61,551

6,992

3,616

(69,165)

(9,580)

(3,550)

(351)

(9,580)

(3,550)

(351)

(123,521)

— $ 1,069,260 $ 1,069,260 $

— $ 1,117,224 $ 1,117,224

— $

(1,111) $

— $

(1,427) $

(1,427)

(58,539) $
of year
(ii) Return on plan assets greater (less) than discount rate

(78,183) $ (136,722) $

(60,369) $

(47,951) $ (108,320)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

Amounts recognized in the consolidated balance sheet consist of:

Employee benefit assets

Employee benefit liabilities

Pension benefit expense recognized in net earnings (loss) from continuing operations:

Current service cost - defined benefit

Current service cost - defined contribution and multi-employer plans

Net interest cost (benefit)

Administrative costs
Curtailment (gain)(i)
Special termination benefits(i)
Plan amendments(i)
Settlement loss(i)
Net pension benefit expense

As at December 31,

2015

2014

66,519

88,162

203,241

196,482

$ (136,722)

$ (108,320)

2015

2014

13,688

12,822

16,038

2,515

3,024

(109)

1,131

—

1,155

16,781

(782)

3,483

(1,030)

590

540

—

37,442

32,404

(i)

Included in restructuring and other related costs.

For the year ended December 31, 2015, the Company expensed salaries of $708.5 million (2014: $696.1 million from
continuing operations), excluding pension and other post-retirement benefits.

Amounts recognized in other comprehensive income (loss) (before income taxes) from continuing operations:

Actuarial gains (losses)

2015

539

2014

$ (66,983)

The significant actuarial assumptions adopted in measuring the Company’s accrued benefit obligations and net benefit plan
expense are as follows:

Weighted average discount rate used to calculate the net benefit plan expense

Weighted average discount rate used to calculate year end benefit obligation

Rate of salary increase

Medical cost trend rates

(i)

4.25% was used for the plans related to Canada Bread as at February 12, 2014.

Plan assets comprise of:

Equity securities

Debt securities

Other investments and cash

2015

3.75%

3.50%

5.00%

2014

4.50%
3.75%(i)
3.50%

5.00%

As at December 31,

2015

59%

40%

100%

2014

60%

39%

100%

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

As at December 31, 2015, 28% of the equity securities are a Level 1 on the fair value hierarchy, with the remainder being
Level 2. All of the debt securities are a Level 2 on the fair value hierarchy.

Other post-retirement benefits expense from continuing operations:

Current service cost

Interest cost

Impact of changes in major assumptions:

2015

112

2,191

2,303

2014

147

2,437

2,584

Increase (decrease) in defined benefit obligation

Actuarial Assumption

Period end discount rate

Sensitivity

3.75% 0.25% decrease

Other post-

Total

retirement

pensions

$ 34,344

benefits

1,655

0.25% increase

$ (33,312)

$ (1,496)

Rate of salary increase
Mortality

3.50%
110% of 2014 Private
Sector Canadian
Pensioners' Mortality
Table, projected
generationally using
Scale CPM-B

0.50% increase
Increase of 1 year
in expected
lifetime of plan
participants

$
3,164
$ 32,035

N/A
1,924

Total

$ 35,999

$ (34,808)

$
3,164
$ 33,959

Measurement dates:

2015 expense

Balance sheet

December 31, 2014

December 31, 2015

The average expected maturity of the pension obligations is 12.9 years (2014: 12.7 years).

The Company expects to contribute $10.7 million to pension plans in 2016, inclusive of defined contribution plans and multi-
employer plans.

Governance and Risk Management

The Company administers its pension plans through its Board of Directors. The Company’s Board of Directors has established
a governance structure and delegated to the Audit Committee and the Pension Investment Advisory Committee all aspects of
the investment of the funds. The Company’s Board of Directors has delegated to the Pension Policy and Administration
Committee the authority to make amendments to the documents that govern the pension plans of an administrative or
compliance nature, that relate to collective bargaining agreements entered into by the Company or that have a minimal
financial impact on the plans.

In fulfilling their responsibilities, the Audit Committee and the Pension Investment Advisory Committee may delegate functions
or responsibilities to, or otherwise utilize employees of the Company where appropriate. The Audit Committee and the Pension
Investment Advisory Committee may rely on independent experts for certain aspects of the funds’ operations. The Audit
Committee or the Pension Investment Advisory Committee, as appropriate, retain responsibility and utilize suitable personnel
for such activities and monitor the activities undertaken by the selected personnel.

The Supplemental Retirement Plan for the Managers of Multi-Marques Inc. and its Participating Subsidiaries is registered in
Québec, Canada, and therefore, operates under the regulations established by the Régis des rentes du Québec. As required
by the regulations, the plan is administered by the Multi-Marques Pension Committee and is responsible for all aspects of the
operations of the Multi-Marques Plan. The Multi-Marques Pension Committee has delegated certain aspects of its
responsibilities and powers, regarding the operations of the Multi-Marques Plan, to the Company. After the sale of Canada
Bread, as described in Note 22, the Multi-Marques Plan is no longer included in the consolidated financial position of the
Company.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

The plan assets are invested primarily in well-diversified pooled funds that meet the constraints set out in legislation of the
jurisdictions in which the plans operate. Further diversification criteria set out in investment funds' governing documents
require the division of investments between equities and fixed income. There are no significant concentrations of risks.

Multi-Employer Plans

The Company contributes to both the Canadian Commercial Workers Industry Pension Plan and until the sale of Canada
Bread in 2014, contributed to the Bakery and Confectionery Union and Industry Canada Pension Fund, which are multi-
employer defined benefit plans for employees who are members of the United Food and Commercial Workers union and the
Canadian Bakery and Confectionery union, respectively. These are large-scale plans for union workers of multiple companies
across Canada and the U.S. Adequate information to account for these contributions as a defined benefit plan in the
Company’s statements is not available due to the size and number of contributing employers in the plan. Included in pension
benefit expense is $0.8 million (2014: $1.6 million) related to payments into these plans. The Company expects to contribute
$0.7 million into these plans for in 2016.

10. GOODWILL

The continuity of goodwill for the years ended December 31, 2015 and 2014 is as follows:

Cost

Balance, beginning of year

Transfers to assets held for sale

Foreign currency translation

Balance, end of year

Impairment losses

Balance, beginning of year

Transfers to assets held for sale

Foreign currency translation

Balance, end of year

Net carrying amounts

As at December 31,

2015

2014

$ 428,236

$ 826,040

—

(401,974)

4,170

$ 428,236

—

$ (105,242)

108,390

(3,148)

—

$ 428,236

For the purposes of annual impairment testing, goodwill is allocated to the Meat Products CGU Group, being the group
expected to benefit from the synergies of the business combinations in which the goodwill arose.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

Annual impairment testing involves determining the recoverable amount of the CGU group to which goodwill is allocated, and
comparing this to the carrying value of the CGU group. The measurement of the recoverable amount of the CGU group was
calculated based on fair value less costs to sell. Where there was no market information available, fair value was determined
by discounting the future cash flows generated from the continuing use of the group. The calculation of the fair value based on
discounting the future cash flows was based on the following key assumptions:

•

Cash flows were projected based on the Company's business plan. Cash flows for future periods were extrapolated
using the growth rates listed below. These rates do not exceed the long term average growth rate for the countries in
which the groups operate. Material differences in these estimates could have a significant impact on the
determination of the recoverable amount.

The business plan contains forecasts based on past experience of actual operating results in conjunction with
anticipated future growth opportunities. While the forecast does assume some base business expansion, largely
related to innovation, the primary engine of growth is strategic in nature and is consistent with the projects and
expectations as articulated in the Company's strategic plan.

Discount rates as shown in the table below were applied in determining the recoverable amount of the CGU group.
The discount rate was estimated based on past experience and the weighted average cost of capital of the Company
and other competitors in the industry.

CGU Group

Meat Products

Discount Rate

Growth Rate

2015

8.6%

2014

10.0%

2015

2.2%

2014

2.3%

The values assigned to the key assumptions represent Management's assessment of future trends in the industries in which
the CGU group operates and are based on both external and internal sources and historical trend data.

11. INTANGIBLE ASSETS

Definite life

Indefinite life

Total intangible assets

As at December 31,

2015

2014

$ 71,302

$ 98,213

66,853

$ 138,155

$ 165,066

Cost

Software in
use

Software in
process

Trademarks

Customer
relationships

Definite Life

Balance at December 31, 2014

$ 149,285

Additions

Disposals

Transfers

—

(782)

2,375

Balance at December 31, 2015

$ 150,878

Amortization and impairment losses

Balance at December 31, 2014

Amortization

Disposals

Balance at December 31, 2015

Net at December 31, 2015

$ 52,051

32,635

(782)

$ 83,904

$ 66,974

979

5,724

—

(2,375)

4,328

—

4,328

—

Total

$ 150,264

5,724

(782)

—

$ 155,206

$ 52,051

32,635

(782)

$ 83,904

$ 71,302

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

Cost

Software in
use

Software in
process

Trademarks

Customer
relationships

Total

Definite Life

Balance at December 31, 2013

$ 123,119

$ 21,963

8,220

$ 14,043

$ 167,345

Additions

Capitalized Interest

Transfers to assets held for sale

Transfers

Other

Effect of movement in exchange rates

—

(5,807)

31,381

592

—

Balance at December 31, 2014

$ 149,285

Amortization and impairment losses

Balance at December 31, 2013

$ 26,982

Amortization

Transfers to assets held for sale

Other

Effect of movement in exchange rates

Balance at December 31, 2014

Net at December 31, 2014

25,869

(1,392)

592

—

$ 52,051

$ 97,234

10,408

252

(1,027)

(31,381)

764

—

979

—

979

—

10,408

252

(8,223)

(14,431)

(29,488)

—

8,035

(8,041)

—

388

—

1,356

391

$ 150,264

5,426

$ 40,443

(5,558)

—

25,928

(14,991)

592

$ 52,051

$ 98,213

Carrying Amount

Balance at December 31, 2013

Additions

Transfer to assets held for sale

Disposals

Indefinite Life

Trademarks

Delivery
routes

$ 50,947

—

(4,247)

—

576

2,172

(574)

(2,174)

Quota

Total

$ 20,153

$ 71,676

—

2,172

(4,821)

(2,174)

Balance at December 31, 2014 and 2015(i)

$ 46,700

—

$ 20,153

$ 66,853

(i)

There was no change in indefinite life intangibles in 2015.

Amortization

Amortization is recorded through cost of goods sold or selling, general, and administrative expenses depending on the nature
of the asset.

Borrowing Costs

For the year ended December 31, 2015, there were no borrowing costs capitalized (2014: $0.3 million, using an average
capitalization rate of 6.7%).

Indefinite Life Intangibles

The indefinite life intangible assets are allocated to the Meat Products CGU Group.

The Company performs annual impairment testing on its indefinite life intangible assets. Annual impairment testing, consistent
with the impairment testing for goodwill as described in Note 10, involves determining the recoverable amount of each
indefinite life intangible asset and comparing it to the net carrying value.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

Trademarks

The recoverable value of trademarks is calculated using the royalty savings approach, which involves present valuing the
royalties earned by similar trademarks. The key assumptions used in this determination are:

Royalty rate range

Growth rate

Discount rate

Quotas

2015

2014

1.5 - 2.0%

0.5 - 2.0%

2.25%

10.0%

1.65%

10.0%

The recoverable value of quotas is determined based on recent sales of similar quota, as this is an active market and reliable
information is readily available.

Delivery Routes

All delivery routes were disposed of during the year ended December 31, 2014 as part of the Canada Bread sale (Note 22).

12. PROVISIONS

Restructuring and related
provisions

Severance
and other
employee
related costs

Site
closing
and other
cash costs

Lease
make-
good

Environ-
mental

Total

$ 11,030

$ 4,457

$ 47,817

$12,324

$ 77,878

—

(2,240)

(490)

—

250

—

(1,350)

(1,020)

19,874

(1,844)

(40,324)

(410)

5,038

(82)

(8,464)

337

25,162

(4,166)

(50,628)

(1,093)

$ 47,153

$ 32,531

14,622

$ 47,153

Balance at December 31, 2014

Charges

Reversals

Cash payments

Non-cash items

Legal

$ 2,250

—

Balance at December 31, 2015

$ 2,250

$ 8,300

$ 2,337

$ 25,113

$ 9,153

Current

Non-current

Total at December 31, 2015

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

Balance at December 31, 2013

$ 561

$ 12,603

Legal

Environ-
mental

Charges

Reversals

Cash payments

Non-cash items

Foreign currency translation

Transfer to liabilities associated

with assets held for sale

2,191

—

(502)

—

(177)

—

(80)

Restructuring and related
provisions

Severance
and other
employee
related costs

Site closing
and other
cash costs

Total

$ 44,432

$12,124

$ 74,456

48,361

(7,684)

(27,751)

(5,244)

(29)

4,306

(67)

(4,723)

3,153

222

56,992

(7,751)

(33,153)

(2,091)

217

Lease
make-
good

$ 4,736

2,134

—

104

(1,316)

(2,517)

(4,268)

(2,691)

(10,792)

Balance at December 31, 2014

$ 2,250

$ 11,030

$ 4,457

$ 47,817

$12,324

Current

Non-current

Total at December 31, 2014

Restructuring and Other Related Costs

$ 77,878

$ 60,443

17,435

$ 77,878

For the year ended December 31, 2015, the Company recorded restructuring and other related costs of $33.8 million.

The Meat Products Group incurred $15.3 million in restructuring and other related costs, of this amount, $8.7 million related to
asset impairment and accelerated depreciation, $2.4 million related to severance and other employee costs and $4.2 million
related to site closing costs.

The balance of restructuring costs for the year ended December 31, 2015, relate primarily to severance and other employee
costs that were incurred in connection with other ongoing management and organizational structure restructuring initiatives.

For the year ended December 31, 2014, the Company recorded restructuring and other related costs of $67.6 million. The
Meat Products Group incurred $37.2 million in restructuring and other related costs primarily related to the implementation of
the Value Creation Plan. Of this amount, $21.4 million related to asset impairment and accelerated depreciation, $12.8 million
related to severance and other employee costs and $3.0 million related to site closing costs.

The balance of restructuring costs for the year ended December 31, 2014, relate primarily to severance and other employee
costs including share-based payments as described in Note 24, that were incurred in connection with other ongoing
management and organizational structure restructuring initiatives.

13. LONG-TERM DEBT

Current portion of long-term debt

Long-term debt

As at December 31,

2015

2014

813

472

9,843

10,017

$ 10,656

$ 10,489

On February 3, 2015, the Company amended its existing $200.0 million revolving credit facility by extending the maturity of the
facility to June 30, 2016 under similar terms and conditions using the same syndicate of Canadian, U.S., and international
institutions. The facility bears interest based on short-term interest rates. The facility is intended to meet the Company's
funding requirements for general corporate purposes, and to provide appropriate levels of liquidity. As at December 31, 2015,
the Company had drawn only letters of credit of $60.3 million (2014: $21.6 million) on this facility.

The revolving term facility requires the maintenance of certain covenants. As at December 31, 2015, the Company was in
compliance with all of these covenants.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

On August 6, 2014, the Company entered into an uncommitted credit facility for issuing up to a maximum of $120.0 million
letters of credit. As at December 31, 2015, $79.4 million of letters of credit had been issued thereon (2014: $82.3 million).
These letters of credit have been collateralized with cash, as further described in Note 4 of the consolidated financial
statements.

The Company has various government loans on specific projects, with interest rates ranging from non-interest bearing to 2.9%
per annum. These facilities are repayable over various terms from 2022 to 2025. As at December 31, 2015, $10.7 million
(2014: $10.5 million) was outstanding. All of these facilities are committed.

The Company’s estimated average effective cost of borrowing for 2015 was approximately 4.5%, which excludes any impact of
interest rate hedges (2014: 7.0% after taking into account the impact of interest rate hedges). Required repayments of long-
term debt are as follows:

2016

2017

2018

2019

2020

Thereafter

Total long-term debt

$ 1,123

1,040

7,055

$ 12,338

In 2014, the Company repaid notes payable for an amount of US$360.5 million (CDN$395.5 million) and CDN$400.0 million,
comprising US$318.0 million (CDN$348.8 million) and CDN$354.5 million of principal, US$36.7 million (CDN$38.7 million) and
CDN$37.6 million of early repayment premium, and US$5.8 million (CDN$6.4 million) and CDN$7.9 million of accrued interest.

The notes were issued in various tranches in both U.S. and Canadian dollar-denominations, with maturity dates from 2014 to
2021 and bearing interest at fixed coupon rates between 4.9% and 6.2%.

In 2014, the Company amended its existing revolving credit facility to include additional shorter-term financing with a non-
revolving component. Upon the closing of the sale of Canada Bread on May 23, 2014, the non-revolving component of the
facility expired and the revolving component was reduced to $200.0 million expiring on March 31, 2015 (Note 20). The facility
was subsequently amended and extended to June 30, 2016 as described above.

14. OTHER CURRENT LIABILITIES

Derivative instruments

Liability for share-based compensation

Obligation for repurchase of shares

Other

15. OTHER LONG-TERM LIABILITIES

Derivative instruments

Step rent and lease inducements

Other

As at December 31,

Notes

2015

2014

Note

$ 13,662

$ 13,932

—

12,574

3,401

6,469

—

3,982

$ 29,637

$ 24,383

As at December 31,

2015

2014

6,480

7,748

9,545

4,876

8,521

4,630

$ 20,901

$ 20,899

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

16. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

Attributable to Common Shareholders

Balance at December 31, 2014

Other comprehensive income (loss)

Transfer to retained earnings

Balance at December 31, 2015

Foreign
currency
translation
adjustments(i)
$ 737

1,769

—

$ 2,506

Unrealized
gain (loss)
on cash flow
hedges(i)
(963)
$

(1,957)

—

Change in
actuarial
gains and
(losses)(ii)
$
—

389

(389)

—

$ (2,920)

Attributable to Common Shareholders

Balance at December 31, 2013

Other comprehensive income (loss)

Transfer to retained earnings

Transfer to held for sale

Balance at December 31, 2014

Foreign
currency
translation
adjustments(i)
$ 269

Unrealized
gain (loss)
on cash flow
hedges(i)
$ (4,862)

(557)

—

1,025

$ 737

4,125

—

(226)

(963)

Change in
actuarial
gains and
(losses)(ii)
$
—

(50,869)

50,869

—

Total
accumulated
other
comprehensive
income (loss)
associated
with continuing
operations

(226)

201

(389)

(414)

Total
accumulated
other
comprehensive
income (loss)
associated
with continuing
operations

$ (4,593)

(47,301)

50,869

799

(226)

(i)
(ii)

Items that are or may be subsequently reclassified to profit or loss.

Items that will not be reclassified to profit or loss.

The Company estimates that $2.9 million net of tax of $1.0 million of the unrealized gain included in accumulated other
comprehensive income (loss) will be reclassified into net earnings within the next 12 months. The actual amount of this
reclassification will be impacted by future changes in the fair value of financial instruments designated as cash flow hedges.
The actual amount reclassified could differ from this estimated amount.

For the year ended December 31, 2015, a loss of approximately $11.1 million, net of tax of $3.9 million, was released to
earnings from accumulated other comprehensive income (loss) and included in the net change for the period (2014: loss of
approximately $12.5 million, net of tax of $4.4 million. This loss is inclusive of $7.1 million, net of tax of $2.5 million, related to
the terminated cross-currency interest rate swaps as disclosed in Note 18).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

17. SHARE CAPITAL

Share Capital

(thousands of shares)

Balance, beginning of year

Distributions under share-based compensation plans

Exercise of share options

Shares repurchased

Purchase of treasury stock

Balance, end of year

Common Shares

Treasury Stock

2015

2014

142,943

140,142

148

262

(8,137)

(229)

642

2,699

—

(540)

134,987

142,943

2015

2014

114

(148)

(642)

—

229

—

540

The authorized share capital consists of an unlimited number of common shares, an unlimited number of non-voting common
shares, and an unlimited number of preference shares. These shares have no par value.

The holders of common shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per
share at meetings of the Company.

On May 1, 2014, shareholders of the Company reconfirmed the Shareholder Rights Plan (the "Rights Plan"). While the Rights
Plan was entered into on December 5, 2011, it required reconfirmation by shareholders of the Company at the May 2014
annual meeting in order to remain in effect. The Rights Plan will expire if it is not reconfirmed by shareholders at the 2017
annual meeting, unless it is otherwise terminated pursuant to its terms before that time.

Treasury Stock

Treasury stock is comprised of shares purchased by a trust in order to satisfy the requirements of the Company's Share
Incentive Plan, as described in Note 24.

Share Repurchase

On March 23, 2015 the Toronto Stock Exchange ("TSX") accepted the Company's notice of intention to commence a new
Normal Course Issuer Bid ("NCIB"), which allowed the Company to repurchase, at its discretion, up to approximately 8.65
million common shares in the open market or as otherwise permitted by the TSX, subject to the normal terms and limitations of
such bids. Common shares purchased by the Company are canceled. The program commenced on March 25, 2015 and was
terminated subsequent to year end, on January 22, 2016, as the Company completed its purchase and cancellation of 8.65
million common shares for $194.5 million at a weighted average price paid of $22.48 per common share.

During the year ended December 31, 2015, 8.14 million shares were purchased for cancellation for $182.5 million at a volume
weighted average price paid of $22.44 per common share.

The Company entered into an Automatic Share Purchase Plan ("ASPP") with a broker that allows the purchase of common
shares for cancellation under the NCIB at any time during predetermined trading blackout periods. During the year ended
December 31, 2015, an obligation for the repurchase of shares of $12.6 million was recognized under the ASPP.

18. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT ACTIVITIES

Capital

The Company typically uses leverage in its capital structure to reduce the cost of capital. The Company’s goal is to maintain its
primary credit ratios and leverage at levels that are designed to provide continued access to investment-grade credit pricing
and terms. The Company measures its credit profile using a number of metrics, some of which are non-IFRS measures,
primarily cash and cash equivalents, less long-term debt and bank indebtedness (“net cash (debt)”) to earnings before interest,
income taxes, depreciation, amortization, restructuring and other related costs (“EBITDA”), and interest coverage.

The Company’s various credit facilities are subject to certain financial covenants. As at December 31, 2015, the Company was
in compliance with all of these covenants.

In addition to senior debt, credit facilities, and equity, the Company uses leases and very limited recourse accounts receivable
securitization programs as additional sources of financing.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

There have been no material changes to the Company’s risk management activities since December 31, 2014.

Financial Instruments

The Company’s financial assets and liabilities are classified into the following categories:

Cash and cash equivalents

Accounts receivable

Notes receivable

Bank indebtedness

Accounts payable and accrued liabilities

Long-term debt
Derivative instruments(i)

Held for trading

Loans and receivables

Other financial liabilities

Held for trading

(i)

These derivative instruments may be designated as cash flow hedges or as fair value hedges as appropriate.

The Company applies hedge accounting and uses derivatives and other non-derivative financial instruments to manage its
exposures to fluctuations in foreign exchange rates and commodity prices.

The fair values and notional amounts of derivative financial instruments as at December 31 are shown below:

Cash flow hedges

Foreign exchange contracts(ii)
Commodity contracts(ii)

Fair value hedges
Commodity contracts(ii)
Derivatives not designated in a

formal hedging relationship

Interest rate swaps
Foreign exchange contracts(ii)
Commodity contracts(ii)

Total fair value
Current(iii)
Non-current

Total fair value

2015

2014

Notional
amount(i)

Fair value

Asset

Liability

Notional
amount(i)

Fair value

Asset

Liability

$ 101,768

258

$ 3,740

$ 159,032

340

$ 2,964

16,292

—

457

10,879

1,339

40,128

$ 1,746

— $

7,990

824

—

$ 520,000

$ 5,078

$ 12,798

$ 1,180,000

— $ 12,488

161,456

197,205

2,587

3,119

921

2,226

147,489

414,948

$ 12,788

$ 20,142

$ 10,265

$ 13,662

2,523

6,480

$ 12,788

$ 20,142

439

11,687

6,223

$ 14,629

$ 21,680

$ 14,629

$ 13,932

—

7,748

$ 14,629

$ 21,680

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

Financial assets and liabilities classified as held-for-trading are recorded at fair value. The fair values of the Company’s
interest rate and foreign exchange derivative financial instruments were estimated using current market measures for interest
rates and foreign exchange rates. Commodity futures and commodity options contracts are exchange-traded and over-the-
counter. Fair value is determined based on exchange prices and other observable market data.

For the year ended December 31, 2015, the pre-tax amount of hedge ineffectiveness recognized in other income was a gain of
$0.1 million (2014: loss of $0.2 million).

The table below sets out fair value measurements of financial instruments as at December 31, 2015 using the fair value
hierarchy:

Assets:

Foreign exchange contracts

Commodity contracts

Interest rate swaps

Liabilities:

Foreign exchange contracts

Commodity contracts

Interest rate swaps

Level 1

Level 2

Level 3

Total

—

2,845

4,865

—

4,865

—

457

—

457

—

5,078

7,923

4,661

2,226

12,798

19,685

—

2,845

4,865

5,078

12,788

4,661

2,683

12,798

20,142

The risks associated with the Company’s financial instruments and policies for managing these risks are detailed below.

Credit Risk

Credit risk refers to the risk of losses due to failure of the Company’s customers and counterparties to meet their payment
obligations.

In the normal course of business, the Company is exposed to credit risk from its customers, substantially all of which are in the
retail, food service, industrial, and convenience channels. The Company performs ongoing credit evaluations of new and
existing customers’ financial condition, and reviews the collectability of its trade accounts receivable and other receivables in
order to mitigate any possible credit losses. The Company has accounts receivable outstanding greater than 60 days past
due and maintains an allowance for doubtful accounts relating to specific losses estimated on individual exposures as
described in Note 5. Average accounts receivable days sales outstanding for the year is consistent with historic trends.

The Company is exposed to credit risk on its notes receivable from a financial institution that holds an equity interest in an
unconsolidated structured entity in respect of the accounts receivable securitization program as described in Note 25.
Management believes that this credit risk is limited by the long-term AA- debt rating held by the counterparty. The Company is
exposed to credit risk on its cash and cash equivalents (comprising primarily of deposits with Canadian chartered banks) and
non-exchange-traded derivative contracts. The Company mitigates this credit risk by transacting primarily with counterparties

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

that are major international financial institutions with long-term debt ratings of A or higher. The Company’s maximum exposure
to credit risk at the balance sheet date consisted primarily of the carrying value of non-derivative financial assets and non-
exchange-traded derivatives with positive fair values.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

The contractual undiscounted principal cash flows payable in respect of financial liabilities as at the balance sheet date, were
as follows:

December 31, 2015

Due within 1
year

Due between
1 and 2 years

Due between
2 and 3 years

Due after 3
years

Financial liabilities

Accounts payable and accruals
Long-term debt(i)
Foreign exchange contracts

Commodity futures contracts
Interest rate swaps(i)
Other liabilities

Total

$ 256,473

1,123

4,661

2,683

6,318

14,301

$ 285,559

—

1,040

—

6,480

1,196

8,716

—

1,040

—

9,135

—

849

—

2,157

Total

$ 256,473

12,338

4,661

2,683

12,798

18,503

1,889

$ 11,292

$ 307,456

(i) Does not include contractual interest payments

As at December 31, 2015, the Company had available undrawn committed credit of $139.7 million (2014: $178.4 million)
under the terms of its principal banking arrangements (Note 13). These banking arrangements are subject to certain
covenants and other restrictions.

Market Risk

Interest Rate Risk

Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instrument will
fluctuate due to changes in market interest rates.

As at December 31, 2015, 10.4% (2014: 12.0%) of the Company’s outstanding debt and revolving accounts receivable
securitization program were not exposed to interest rate movements.

On March 14, 2014, the Company issued a notice of repayment of its notes payable, with a subsequent repayment on April 14,
2014 (Note 13). On the original issuance of the U.S. denominated debt, and in order to hedge against the foreign exchange
risk associated with the issuance of U.S. denominated debt, the Company entered into cross-currency interest rate swaps.
The cross-currency swaps converted the U.S. denominated fixed-rate notes, into fixed-rate Canadian denominated notes, and
were accounted for as cash flow hedges.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

the same period, the Company terminated cross-currency interest rate swaps maturing in 2021 and the remaining cross-
currency swaps matured in 2014.

Foreign Exchange Risk

Foreign exchange risk refers to the risk that the value of financial instruments or cash flows will fluctuate due to changes in
foreign exchange rates.

The Company’s foreign exchange risk arises primarily from transactions in currencies other than Canadian dollars, U.S. dollar-
denominated borrowings, and investments in foreign operations.

The Company uses foreign exchange forward contracts to manage foreign exchange transaction exposures. The primary
currencies to which the Company is exposed to are the U.S. dollar and the Japanese yen. Qualifying foreign currency forward
contracts are accounted for as cash flow hedges. As of December 31, 2015, $101.8 million (2014: $159.0 million) of
anticipated foreign currency denominated sales and purchases have been hedged with underlying foreign exchange forward
contracts settling at various dates beginning January 2016. The aggregate net fair value of these forward contracts was a loss
of $3.5 million as at December 31, 2015 (2014: loss of $2.6 million) that was recorded in accumulated other comprehensive
income (loss) with an offsetting amount recorded in other current assets and liabilities. The Company also holds foreign
exchange contracts for $161.5 million (2014: $147.5 million) related to anticipated foreign currency denominated sales and
purchases that are not held in a qualifying hedge relationship.

It is estimated that, all else constant, an adverse hypothetical 10% change in the value of the Canadian dollar against all
relevant currencies would result in a change in the fair value of the Company’s foreign exchange forward contracts of $4.2
million, with a corresponding change in net earnings of $5.5 million offset by a change in other comprehensive income (loss) of
$9.7 million.

Commodity Price Risk

The Company uses futures to minimize the price risk assumed under forward priced contracts with suppliers. This includes
futures contracts that are designated and accounted for as fair value hedges as well as non-designated instruments.

The Company also uses futures to minimize the price risk of anticipated or forecasted transactions which are accounted for as
cash flow hedges as well as non-designated derivative instruments.

Changes in the fair value of the cash flow hedging derivatives are recorded in other comprehensive income (loss) to the extent
the hedge is effective in mitigating the exposure to the related anticipated transaction, and subsequently reclassified to
earnings to offset the impact of the hedged items when they affect earnings. The aggregate fair value of these futures
contracts was a gain of $0.5 million for the year ended December 31, 2015 (2014: gain of $1.3 million) that was recorded in
accumulated other comprehensive income (loss) with an offsetting amount recorded in other current liabilities.

It is estimated that, all else constant, an adverse hypothetical 10% change in market prices of the underlying commodities
would result in a change in the fair value of underlying outstanding derivative contracts of $7.5 million, with a change in net
earnings of $7.0 million and $0.5 million in other comprehensive income (loss). These amounts exclude the offsetting impact of
the commodity price risk inherent in the transactions being hedged.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

19. OTHER INCOME (EXPENSE)

Gain (loss) on disposal of property and equipment

Gain (loss) on sale of investment properties

Recovery from insurance claims

Net investment property loss
Impairment of assets(i)
Depreciation of assets used to support divested businesses(ii)
Interest income

Provision estimate changes
Net expense on non-designated interest rate swaps(iii)
Change in fair value of non-designated interest rate swaps(iii)
Other

(i)

Impairments of assets

Property and equipment

Other assets

Total impairments

2015

2014

(753)

$ (1,688)

11,097

2,010

(3,578)

(1,907)

350

—

(1,268)

(2,287)

(14,482)

(11,508)

3,393

2,217

(5,034)

4,768

370

3,344

(4,220)

(3,970)

3,783

673

$ (1,899)

$ (16,791)

2015

1,907

—

1,907

2014

1,522

765

2,287

(ii) Depreciation of assets used to support divested businesses

Relates to assets used to provide ongoing information systems support to divested businesses during a transitional period. As
a result of divestitures during the previous year, the Company revised the estimated useful life of these assets, resulting in a
depreciation charge in excess of cost recoveries. During the year ended December 31, 2015, the Company further revised the
estimated useful life of these assets, resulting in a reduction in the depreciation charge recorded during the period.
(iii) Non-designated Interest Rate Swaps

For the year ended December 31, 2015, the net expense on non-designated interest rate swaps is presented in other income,
as this expense is no longer considered a financing cost as a result of the repayment of all of the Company’s outstanding debt
in the second quarter of 2014. The change in fair value of non-designated interest rate swaps has also been reclassified to
other income to appropriately group the similar charges together.

For the year ended December 31, 2014, $4.0 million of net expense on non-designated interest rate swaps, that was
previously presented as interest expense and other financing charges, has been presented as other income. This amount
represents the portion of the expense relating to the period after the outstanding debt was fully repaid. The portion of the
change in fair value of non-designated interest rate swaps relating to the period after the debt was paid of $3.8 million for the
year ended December 31, 2014 has also been reclassified to other income.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

20. INTEREST EXPENSE AND OTHER FINANCING COSTS

Interest expense on long-term debt

Interest on bankers’ acceptances and prime loans

Net interest expense on interest rate swaps

Net interest expense on non-designated interest rate swaps

Interest expense on securitized receivables

Deferred finance charges

Other interest charges

Interest capitalized
Other financing costs(i)

2015

377

2014

$ 13,237

—

1,667

337

2,330

—

9,143

941

2,714

1,821

3,113

2,831

(5,504)

98,578

4,711

$ 126,874

(i) Other financing costs for the year ended December 31, 2014, included costs associated with the repayment of all of the

Company’s outstanding senior notes including an early repayment premium of $76.3 million, write-off of deferred financing
fees of $8.9 million, financing costs associated with the new credit facility of $3.8 million and a release from accumulated
other comprehensive income (loss) on the de-designation of cross-currency interest rate swaps of $9.6 million.

21. INCOME TAXES

The components of income tax expense from continuing operations were as follows:

Current tax expense

Current year

Deferred tax expense

Origination and reversal of temporary differences

Adjustment for prior periods

Change in tax rates

Total income tax expense (recovery)

2015

2014

1,893

3,536

$ 13,225

$ (75,494)

(3,881)

(166)

9,178

$ 11,071

(2,598)

—

$ (78,092)

$ (74,556)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

Reconciliation of Effective Tax rate

Income tax expense varies from the amount that would be computed by applying the combined federal and provincial statutory
income tax rates as a result of the following:

Income tax expense (recovery) according to combined statutory rate of 26.6% (2014: 26.5%)

$ 14,017

$ (76,418)

2015

2014

Increase (decrease) in income tax resulting from:

Deferred tax expense (recovery) relating to changes in tax rates

Tax rate differences in other jurisdictions

Manufacturing and processing credit

Share-based compensation

Non-taxable gains

Non-deductible expenses

Unrecognized income tax benefit of losses

Adjustment for favorable tax audit resolution

Other

Income Tax Recognized in Other Comprehensive Income (Loss)

Derivative instruments(i)
Pension adjustments(i)

(166)

354

(314)

725

—

289

(2,950)

(951)

—

408

2,050

1,212

(1,965)

1,140

411

—

(1,394)

$ 11,071

$ (74,556)

2015

2014

(690)

1,549

150

(16,980)

(540)

$ (15,431)

(i) Derivative and pension adjustments exclude amounts related to discontinued operations of $0.0 million (2014: $0.1

million) and $0.0 million (2014: $1.3 million), respectively. Refer to Note 22 for further details.

Deferred Tax Assets and Liabilities

Recognized Deferred Tax Asset and Liabilities

The Company has recognized deferred tax assets in the amount of approximately $66.9 million (2014: $75.0 million), relating
primarily to tax losses carried forward and future tax deductions in Canada for employee benefits and restructuring expenses.
These deferred tax assets are based on the Company's estimate that it will earn sufficient taxable profits to fully utilize these
tax losses in the appropriate carry over periods.

Deferred tax assets:

Tax losses carried forward

Accrued liabilities

Employee benefits

Other

Deferred tax liabilities:

Property and equipment

Cash basis farming

Goodwill and other intangible assets

Classified in the consolidated financial statements as:

Deferred tax asset

As at December 31,

2015

2014

$ 36,746

$ 47,411

16,955

35,317

4,985

39,376

9,565

734

$ 94,003

$ 97,086

$ 10,465

10,995

5,632

7,673

8,822

5,605

$ 27,092

$ 22,100

$ 66,911

$ 74,986

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

Unrecognized Deferred Tax Assets

The Company has no unrecognized deferred tax assets as at December 31, 2015 and 2014.

Unrecognized Deferred Tax Liabilities

There is no unrecognized temporary difference as at December 31, 2015 and 2014.

22. DISCONTINUED OPERATIONS

Canada Bread Company, Limited

On May 23, 2014, Grupo Bimbo, S.A.B. de C.V. of Mexico (“Grupo Bimbo”) acquired the 90.0% of issued and outstanding
shares of Canada Bread owned by the Company, by way of a statutory plan of arrangement under the Business Corporations
Act (Ontario) (the “Arrangement”). The Company received proceeds of $1,647.0 million for its 90.0% interest in Canada Bread,
resulting in a pre-tax gain of $997.0 million for the year ended December 31, 2014. Upon the sale of the business, the net
assets of Canada Bread have been de-recognized from assets held for sale. For the year ended December 31, 2014, the
Canada Bread operations have been classified as discontinued operations on the Consolidated Statements of Net Earnings,
and are presented as part of Bakery Products Group for segmented reporting.

Olivieri Fresh Pasta and Sauce Business

On November 25, 2013, the Company sold substantially all the net assets of its Olivieri fresh pasta and sauce business
(“Olivieri”), a component of the Bakery Products Group, to Catelli Foods Corporation. The purchase price was finalized during
March 2014. The final net proceeds were $115.8 million, including a pre-tax adjustment in 2014 of $1.9 million and the final
gain on sale was $77.6 million. The adjustment to the gain on disposal and its related tax impact is recognized as part of the
results of discontinued operations for the year ended December 31, 2014.

Rothsay By-product Recycling Business

On October 28, 2013 the Company sold substantially all of the net assets of its Rothsay animal by-product recycling
operations (“Rothsay”), a component of the Agribusiness Group, to Darling International Inc. for net proceeds of $628.5 million,
resulting in pre-tax gain of $526.5 million recognized for the year ended December 31, 2013. For the year ended
December 31, 2014, the Company recorded an adjustment to the gain on disposal of $5.1 million relating to additional
transaction costs incurred associated with the sale.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

Following is a summary of earnings from discontinued operations:

Year ended December 31,

Note

Sales

Cost of goods sold

Gross margin

Selling, general, and administrative expenses

Operating Earnings before the following:

Restructuring and other related costs
Gain on disposal of discontinued operations(i)(ii)
Adjustment of prior gain on disposal of
discontinued operations(iii)
Other income (expense)

Earnings (loss) before interest and income

taxes from discontinued operations

Interest expense and other financing costs

Earnings (loss) before income taxes from

discontinued operations

Income taxes

Net earnings (loss) from discontinued

operations

Attributed to:

Common shareholders

Non-controlling interest

Earnings per share from discontinued

operations attributable to common

shareholders:

Basic and diluted earnings per share from

discontinued operations

Weighted average number of shares (millions)

2014

Canada
Bread

$ 567,861

439,710

$ 128,151

80,322

47,829

(2,612)

996,994

Olivieri

Rothsay

Total

— $

— $ 567,861

—

439,710

— $

— $ 128,151

—

80,322

— $

47,829

—

(2,612)

996,994

—

(1,866)

(5,135)

(1,582)

—

(7,001)

(1,582)

$ 1,040,629

$ (1,866)

$ (5,135)

$ 1,033,628

786

—

786

$ 1,039,843

$ (1,866)

$ (5,135)

$ 1,032,842

108,505

(140)

(1,242)

107,123

$ 931,338

$ (1,726)

$ (3,893)

$ 925,719

$ 929,326

$ (1,689)

$ (3,893)

$ 923,744

2,012

(37)

—

1,975

$ 931,338

$ (1,726)

$ (3,893)

$ 925,719

6.54

141.2

(i)

Included in the gain on disposal of discontinued operations is $8.5 million of share-based compensation expenses for the
year ended December 31, 2014.

(ii) Gain, net of tax, attributable to common shareholders $894.5 million for the year ended December 31, 2014.
(iii) Adjustment of prior gain on disposal of discontinued operations includes $2.5 million of share-based compensation

granted for the year ended December 31, 2014.

In order to accurately represent the continuing and discontinuing operations sales and cost of goods sold, certain
intercompany eliminations have been reversed in the amounts presented above and in the statement of net earnings for all
periods presented.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

Twelve months ended December 31,

Operating cash flows
Financing cash flows(ii)
Investing cash flows

Net cash flows

Canada
Bread

(41,059)

(246,583)

1,584,833

2014

Olivieri

$ 160

—

(468)

Total(i)
(40,899)

(246,583)

1,584,365

$ 1,297,191

$ (308)

$ 1,296,883

(i) The Rothsay operation was sold during the year ended December 31, 2013, and had no cash flows for the year ended

December 31, 2014.

(ii)

Includes intercompany dividends that are eliminated on consolidation.

23. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share amounts are calculated by dividing the net earnings (loss) attributable to common
shareholders of the Company by the weighted average number of shares outstanding during the year.

Diluted earnings (loss) per share amounts are calculated by dividing the net earnings (loss) attributable to common
shareholders of the Company by the weighted average number of shares outstanding during the year, adjusted for the effects
of potentially dilutive stock options.

The following table sets forth the calculation of basic and diluted earnings (loss) per share (“EPS”):

Years ended December 31,

Basic

Continuing operations

Gain on sale of business, net of tax

Discontinued operations before gain on sale

of business

Stock options(i)
Diluted

Continuing operations

Gain on sale of business

Discontinued operations before gain on sale

of business

Attributable to Common Shareholders

2015

Weighted
average
number of
shares(ii)

140.2

1.5

141.7

Net
earnings
(loss)

$ 41,580

—

$ 41,580

—

$ 41,580

Net
earnings
(loss)

EPS

$ 0.30

$ (213,813)

—

894,528

29,216

$ 0.30

$ 709,931

$ 0.29

$ (213,813)

—

894,528

29,216

$ 0.29

$ 709,931

2014

Weighted
average
number of
shares(ii)

EPS

141.2

$ (1.51)

6.33

0.21

$ 5.03

141.2

—

141.2

$ (1.51)

6.33

141.2

0.21

$ 5.03

(i) Excludes the effect of approximately 4.0 million options to purchase common shares and performance share units (2014:

4.8 million) that are anti-dilutive.

(ii)

In millions.

24. SHARE-BASED PAYMENT

Under the Maple Leaf Foods Share Incentive Plan in effect as at December 31, 2015, the Company may grant options to its
employees and employees of its subsidiaries to purchase shares of common stock and may grant Restricted Share Units
(“RSUs”) and Performance Share Units (“PSUs”) entitling employees to receive common shares or cash at the Company’s
option. Options, RSUs, and PSUs are granted from time to time by the Board of Directors on the recommendation of the
Human Resources Compensation Committee. The vesting conditions are specified by the Board of Directors and may include

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

the continued service of the employee with the Company and/or other criteria based on measures of the Company’s
performance.

Under the Company’s Share Purchase and Deferred Share Unit Plan (“DSU Plan”), eligible Directors may elect to receive their
retainer and fees in the form of Deferred Share Units (“DSUs”) or as common shares of the Company.

During March 2014, as a result of the planned sale of Canada Bread, the Company modified the terms of the plan to allow for
RSUs and PSUs outstanding at that date, to be cash settled. The Company also made changes to the performance criteria
and vesting period of all RSUs, PSUs, and stock options outstanding. This resulted in an additional expense of $6.7 million at
the date of modification and $2.0 million on market value adjustment at the date of sale of Canada Bread. This additional
expense was reflected in selling, general, and administrative expenses. Additionally, $23.4 million was re-classified from equity
to liabilities.

Stock Options

A summary of the status of the Company’s outstanding stock options as at December 31, 2015 and 2014, and changes during
these years are presented below:

2015

2014

Weighted
average
exercise
price

Options
outstanding

Outstanding, beginning of year

3,141,200

$ 14.83

Granted

Exercised

Forfeited

Expired

Outstanding, end of year

Options currently exercisable

728,400

(261,600)

—

3,608,000

2,105,600

22.52

11.60

—

$ 16.61

$ 13.22

Options
outstanding

4,679,800

1,161,000

(2,699,600)

—

3,141,200

1,980,200

Weighted
average
exercise
price

$ 11.60

20.28

11.58

—

$ 14.83
$ 11.63

All outstanding stock options vest and become exercisable over a period not exceeding five years (time vesting) from the date
of grant. The options have a term of seven years.

The number of options outstanding as at December 31, 2015, is as follows:

Options Outstanding

Options currently
exercisable

Options subject to
timing vesting only

Range of
exercise prices

Number
outstanding

Weighted
average
exercise
price

Weighted
average
remaining
term of options
(in years)

Weighted
average
exercise
price

Number
exercisable

Weighted
average
exercise
price

Number
outstanding

$11.36 to $22.52

3,608,000

$16.61

4.23

2,105,600

$13.22

1,502,400

$21.37

The number of options outstanding as at December 31, 2014, is as follows:

Options outstanding

Options currently
exercisable

Options subject to
timing vesting only

Range of
exercise prices

Number
outstanding

Weighted
average
exercise
price

Weighted
average
remaining
term of options
(in years)

Weighted
average
exercise
price

Number
exercisable

Weighted
average
exercise
price

Number
outstanding

$11.36 to $20.28

3,141,200

$14.83

5.28

1,980,200

$11.63

1,161,000

$20.28

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

At grant date, each option series is measured at fair value based on the Black-Scholes formula. Expected volatility is
estimated by considering historic average share price volatility. The inputs used in this model for the options granted during the
years ended December 31, 2015 and 2014 are shown in the table below.

Share price at grant date

Exercise price
Expected volatility(i)
Option life (in years)(ii)
Expected dividend yield
Risk-free interest rate(iii)

(i) Weighted average based on number of units granted.
(ii) Expected weighted average life.
(iii) Based on Government of Canada bonds.

2015

$21.86

$22.52

2014

$19.87

$20.28

24.33%

24.78%

4.5

1.46%

0.95%

4.5

0.81%

1.69%

There were 728,400 (2014: 1,161,000) stock options issued during the year ended December 31, 2015. The fair value of
options granted during the year ended December 31, 2015 was $2.6 million (2014: $4.5 million, of this amount $1.5 million
was included in restructuring and other related costs as a non-cash item (Note 12)). Amortization charges relating to current
and prior year options were $2.8 million (2014: $4.7 million).

Restricted Share Units and Performance Share Units

The Company has one plan under which RSUs and PSUs may be granted to employees. The awards granted under the
Restricted Share Unit Plan (adopted in 2006) ("the 2006 Plan") are satisfied either by shares to be purchased on the open
market by a trust established for that purpose, or cash at the option of the Company on the time of vesting.

Under the 2006 Plan, one common share of the Company may be distributed for each RSU, and these units vest strictly over
time. The PSUs are subject to both time and performance vesting. The PSUs provide the holder with up to two RSUs based on
the achievement of predetermined Company performance targets. All outstanding RSUs and PSUs under the 2006 Plan vest
over a period of one to three years from the date of grant.

A summary of the status of the Company’s RSU plans (including PSUs) as at December 31, 2015 and 2014 and changes
during these periods is presented below:

Outstanding, beginning of year

Granted

Exercised

Forfeited

Expired

2015

2014

Weighted
average
fair value
at grant

RSUs
outstanding

Weighted
average
fair value
at grant

$ 15.37

2,746,000

$ 11.17

22.03

14.04

17.40

—

1,299,436

(1,857,624)

(180,643)

(686,910)

18.28

13.20

11.22

10.99

RSUs
outstanding

1,320,259

1,136,045

(751,564)

(106,278)

—

Outstanding, end of year

1,598,462

$ 20.61

1,320,259

$ 15.37

Of the RSUs exercised, the Company settled 581,813 (2014: 1,215,394) units in cash rather than equity instruments.
Commencing from the date of modification the Company has accounted for these as cash-settled awards. As a result of the
terms of modification the amount of this liability is fixed as at the date of the sale of Canada Bread. The remainder of the
Company’s outstanding RSUs are accounted for as equity-settled awards.

The fair value of RSUs and PSUs granted in 2015 was $22.5 million (2014: $23.1 million). Expenses for the year ended
December 31, 2015 relating to current and prior year RSUs and PSUs, were $11.8 million (2014: $28.7 million), of which $2.8
million (2014: $12.7 million) related to RSUs and PSUs that were cash settled. Of the 2014 amount the modification impacts
and a mark-to-market adjustment on the related liability outlined above, of this amount $11.0 million was included in
discontinued operations (Note 22) and $4.1 million was included in restructuring and other related costs as a non-cash item
(Note 12).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

The key assumptions used in the valuation of fair value of RSUs granted during the year are shown in the table below(i).

Expected RSU life (in years)

Forfeiture rate

Risk-free discount rate

(i) Weighted average based on number of units granted.

Director Share Units

2015

2014

1.78

1.60

10.3% 2.5%

0.5% 1.1%

If an eligible Director elects to receive his or her retainer and fees as common shares of the Corporation, the Company
purchases shares at market rates on behalf of the participating Directors.

Prior to 2013, if an eligible Director elected to receive his or her fees and retainer in the form of DSUs, each DSU had a value
equal to the market value of one common share of the Company at the time the DSU is credited to the Director. DSUs attract
dividends in the form of additional DSUs at the same rate as dividends on common shares of the Company. The value of each
DSU is measured at each reporting date and is equivalent to the market value of a common share of the Company at the
reporting date.

In 2013, the Company adopted a new Share Purchase and Deferred Share Unit Plan (the “2013 DSU Plan”), which replaced
the Company’s existing Share Purchase and Deferred Share Unit Plan (the “2002 DSU Plan”). The 2002 DSU Plan only allows
for DSUs to be satisfied in cash, whereas the 2013 DSU Plan allows the Company, at its discretion, the flexibility to satisfy
DSUs in common shares, either issued from treasury or purchased by the Company on the open market. DSUs outstanding
under the 2002 DSU Plan will be governed by the terms of the 2002 DSU Plan, unless a participant elected in writing that his
or her DSUs outstanding under the 2002 DSU Plan are to be governed by the 2013 DSU Plan.

The fair value of director share units expensed during the year ended December 31, 2015 was $1.1 million (2014: $1.3
million).

A summary of the status of the Company’s outstanding DSUs as at December 31, 2015 and 2014, and changes during these
years is presented below:

Units Outstanding

2013 DSU plan

2002 DSU plan

2013 DSU plan

2002 DSU plan

2015

2014

Outstanding, beginning of year

Additions: granted

Additions: dividends reinvested

Exercised

Outstanding, end of year
Value of liability at December 31(i)

(i) Value of liability is only applicable to 2002 plan.

25. COMPOSITION OF THE COMPANY

Subsidiary

396,926

48,327

5,033

(157,052)

293,234

—

18,893

—

276

—

19,169

$ 462

326,900

66,757

3,269

—

396,926

—

18,725

—

168

—

18,893

$ 373

On May 23, 2014, Grupo Bimbo, S.A.B. de C.V. of Mexico (“Grupo Bimbo”) acquired the 90.0% of issued and outstanding
shares of Canada Bread owned by the Company, by way of a statutory plan of arrangement under the Business Corporations
Act (Ontario) (the “Arrangement”). Upon the sale of the business, the net assets of Canada Bread were de-recognized. For the
year ended December 31, 2014, the Canada Bread operations were classified as discontinued operations on the Consolidated
Statements of Net Earnings (Note 22), and were presented as part of Bakery Products Group for segmented reporting (Note
29).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

The financial information before inter-company eliminations of Canada Bread is provided below:

Year ended December 31,

Sales from continuing operations

Net earnings from continuing operations

Net loss from discontinued operations

Net earnings

Other comprehensive income (loss)

Total comprehensive income

Attributed to non-controlling interest:

Net earnings

Total comprehensive income

Year ended December 31,

Operating activities

Financing activities

Investing activities

Increase (decrease) in cash and equivalents

The following is a continuity of non-controlling interests:

Balance at December 31, 2013

Net earnings

Other comprehensive income (loss)

Dividends declared

Disposal of business

Balance at December 31, 2014

Unconsolidated Structured Entity

2014

$ 567,861

19,751

—

19,751

(569)

19,182

1,975

1,918

2014

$ (41,219)

(246,583)

(9,841)

$ (297,643)

Canada Bread and other minority interests

$ 60,863

1,975

(244)

(3,017)

(59,577)

—

The Company has sold certain of its trade accounts receivable to an unconsolidated structured entity owned by a financial
institution, under revolving securitization programs. The Company retains servicing responsibilities for these receivables. The
structured entity finances the purchase of these receivables by issuing senior debt instruments to the financial institution,
short-term mezzanine notes back to the Company, and an equity interest held by the financial institution.

As at December 31, 2015, trade accounts receivable being serviced under these programs amounted to $192.6 million (2014:
$156.6 million). In return for the sale of its trade receivables, the Company will receive cash of $88.9 million (2014: $46.4
million) and notes receivable in the amount of $103.7 million (2014: $110.2 million). The notes receivable are non-interest
bearing and are adjusted on the settlement dates of the securitized accounts receivable. Due to the timing of receipts and
disbursements, the Company may, from time to time, also record a receivable or payable related to the securitization facility.
As at December 31, 2015, the Company recorded a net payable amount of $2.9 million (2014: $30.4 million net payable) in
accounts payable and accruals.

The Company’s maximum exposure to loss due to its involvement with a structured entity is equal to the current carrying value
of the interest in the notes receivable due from the structured entity. The maximum potential loss that could be borne by
subordinated interests in the structured entity is a $1.5 million equity interest. The Company has not recognized any income or
losses with its interest in an unconsolidated structured entity for the year ended December 31, 2015 or 2014.

During the year ended December 31, 2014, the securitization agreements were renewed with substantially the same terms
and conditions, with an expiry date of September 2016.

26. COMMITMENTS AND CONTINGENCIES

(a) The Company has been named as a defendant in several legal actions and is subject to various risks and contingencies

arising in the normal course of business. Management is of the opinion that the outcome of these uncertainties will not
have a material adverse effect on the Company’s financial position.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

(b)

In the normal course of business, the Company and its subsidiaries enter into sales commitments with customers, and
purchase commitments with suppliers. These commitments are for varying terms and can provide for fixed or variable
prices. The Company believes that these contracts serve to reduce risk, and does not anticipate that losses will be
incurred on these contracts.

existing facilities. Contract commitments as at December 31, 2015 were $9.1 million (2014: $27.9 million).

(d) The Company has lease, rent, and other commitments that require minimum annual payments as follows:

2016

2017

2018

2019

2020

Thereafter

65,330

45,153

34,570

28,665

20,810

80,430

$ 274,958

For the year ended December 31, 2015, an amount of $35.7 million was recognized as an expense in earnings in respect of
operating leases (2014: $42.6 million including $7.3 million in discontinued operations).

27. RELATED PARTY TRANSACTIONS

The Company had a 90.0% controlling interest in Canada Bread, a publicly traded subsidiary that was consolidated into the
Company’s results and presented as a discontinued operation, until its sale in May 2014. Transactions between the Company
and its consolidated entities have been eliminated in these consolidated financial statements. Subsequent to the sale of this
controlling interest, Canada Bread ceased to be a related party of the Company and the Company is no longer consolidating
the results and the related balance sheet of Canada Bread, as discussed in Note 22.

The Company sponsors a number of defined benefit and defined contribution plans. During the year ended December 31,
2015, the Company received $0.0 million (2014: $0.7 million) from the defined benefit pension plans for reimbursement of
expenses incurred by the Company to provide services to these plans. During the year ended December 31, 2015, the
Company's contributions to these plans were $9.6 million (2014: $21.3 million which includes $3.7 million made by Canada
Bread, which has been presented as discontinued operations).

Remuneration of key management personnel of the Company is comprised of the following expenses:

Short-term employee benefits

Salaries, bonuses, and fees

Company car allowances

Other benefits

Total short-term employee benefits

Severance benefits(ii)
Post-employment benefits

Share-based compensation

Total remuneration

2015

2014(i)

$ 7,052

$ 12,350

274

256

298

183

$ 7,582

$ 12,831

476

782

8,811

14,193

946

25,076

$ 17,651

$ 53,046

(i)

(ii)

Includes remuneration of Canada Bread key management personnel until the sale of Canada Bread on May 23, 2014.
The 2014 balance includes $5.6 million of share-based compensation.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

28. GOVERNMENT INCENTIVES

For the year ended December 31, 2015, the Company recorded government incentives as a reduction in the cost of related
assets totalling $0.4 million (2014: $1.3 million). Additionally, the Company recorded other incentives in earnings totalling $0.1
million (2014: $0.2 million).

During the year ended December 31, 2014, the Company recorded a $5.0 million interest-free loan from the Canadian
government to support the upgrade of the Company's prepared meats manufacturing network and supply chain. The loan is
repayable over a period of 10 years beginning in 2015.

29. SEGMENTED FINANCIAL INFORMATION

Reportable Segmented Information

The Company has three reportable segments, as described below, which are groupings of the Company’s CGUs. These
segments offer different products and have separate management structures. The Company’s Management regularly reviews
internal reports for these segments. The following describes the operations of each segment:

(a) The Meat Products Group is comprised of value-added processed packaged meat, chilled meal entrées and lunch kits,

and primary pork and poultry processing.

(b) The Agribusiness Group is comprised of the Company’s hog production operations that primarily supply the Meat

Products Group with livestock as well as toll feed sales.

producer of fresh and frozen par-baked bakery products including breads, rolls, bagels, and artisan goods. During the
year ended December 31, 2014, the Company sold its 90.0% ownership interest in Canada Bread. As a result, the Bakery
Products Group has been classified as discontinued operations as at and for the year ended December 31, 2014. Refer to
Note 22 for further details on the disposal activity of the Bakery Products Group.

(d) Non-allocated costs are comprised of expenses not separately identifiable to business segment groups and are not part of

the measures used by the Company when assessing the segment’s operating results. These costs include general
expenses related to the bakery business, changes in fair value of biological assets, unrealized gains or losses on
commodity contracts, and realized gains on commodity contracts that relate to delivery in future periods.

Non-allocated assets are comprised of corporate assets not separately identifiable to business segment groups. These
include, but are not limited to, corporate property and equipment, software, investment properties, and tax balances.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

Sales

Meat Products Group

Agribusiness Group
Bakery Products Group(i)

Total sales

Sales from discontinued operations

Sales from continuing operations

Earnings (loss) before restructuring and other related costs and other income

Meat Products Group

Agribusiness Group
Bakery Products Group(i)
Non-allocated costs

Notes

2015

2014

$ 3,276,994

$3,135,376

15,938

—

21,865

567,861

$ 3,292,932

$3,725,102

—

(567,861)

$ 3,292,932

$3,157,241

$ 108,440

$ (80,381)

1,360

—

(16,714)

8,642

47,829

(7,865)

Total earnings (loss) before restructuring and other related costs and other income

93,086

$ (31,775)

Earnings (loss) before restructuring and other related costs and other income from

discontinued operations

—

(47,829)

Earnings (loss) before restructuring and other related costs and other income

from continuing operations

Capital expenditures

Meat Products Group

Agribusiness Group
Bakery Products Group(i)

Depreciation and amortization

Meat Products Group

Agribusiness Group
Non-allocated costs(ii)
Bakery Products Group(i)

93,086

$ (79,604)

$ 123,455

$ 206,958

22,295

—

9,063

17,789

$ 145,750

$ 233,810

$ 102,302

86,027

6,588

14,590

—

5,928

14,278

5,142

$ 123,480

$ 111,375

(i)

(ii)

The prior year results of Canada Bread were included in the comparative results of the Bakery Products Group.

Includes depreciation on assets used to service divested business.

Total assets

Meat Products Group

Agribusiness Group

Non-allocated assets

Goodwill

Meat Products Group

As at December 31,

2015

2014

$ 1,853,146

$ 1,965,280

188,890

588,829

211,516

699,694

$ 2,630,865

$ 2,876,490

$ 428,236

Information About Geographic Areas

Property and equipment and investment property located outside of Canada was $0.2 million as at December 31, 2015 (2014:
$0.2 million). No goodwill was attributed to operations outside of Canada.

Revenues earned outside of Canada for the year ended December 31, 2015, were $672.7 million (2014: $812.7 million, of
which $144.4 million has been reclassified to net earnings from discontinued operations). Of the total amount earned outside

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 2015 | MAPLE LEAF FOODS INC.

of Canada, $211.6 million (2014: $324.6 million) was earned in the U.S., $282.7 million (2014: $275.5 million) was earned in
Japan, and $0.0 million (2014: $56.4 million) was earned in the U.K. Revenue by geographic area is determined based on the
shipping location.

Information About Major Customers

For the year ended December 31, 2015, the Company reported sales to one customer representing 14.0% of total sales.
These revenues were reported in the Meat Products Group. No other sales were made to any one customer that represented
in excess of 10% of total sales.

For the year ended December 31, 2014, the Company reported sales to two customers representing 13.9% and 12.4% of total
sales before adjustments for discontinued operations. These revenues were reported in both the Meat Products Group and
Bakery Products Group. The Company reported sales to two customers representing 15.5% and 11.1% of total sales from
continuing operations. No other sales were made to any one customer that represented in excess of 10% of total sales.

CORPORATE INFORMATION

Capital Stock

Annual Meeting