Vaapi problem on xbmcbuntu and Intel HD4000 graphics

Hi guys. Basic problem is im getting loads of dropped frames (about 50 a minute) playing back 1080p content on my Intel NUC. The info shows one CPU core maxing out but it doesn't look like its using VAAPI (which i understood to be the only hardware acceleration for an intel graphics chipset, am i right?)

My setup

1) XBMCbuntu - Frodo RC2-Intel (git8e45737)
2) Intel NUC with Intel i3 and HD4000 Graphics (ivybridge Mobile)
3) Streaming from a Synology NAS using NFS share (for this example, i used Sherlock Holmes Blurry MKV rip)
4) Checked that VAAPI is enabled
5) LOG is here http://xbmclogs.com/show.php?id=25345

This is in the log, but couldnt understand anything else!

19:44:08 T:2881547072 ERROR: VAAPI - unable to initialize display -1 - unknown libva error

I have searched for this answer, but cant seem to find anything relevant. Have i missed something should VAAPI work straight away or do i have do something else, like install a driver?

Thanks for any help you can give :-)

Tom