2014 Q3 CEO Letter

Continued Progress Against Strategic Plan

The following CEO Letter was published in the 2014 Q3 Shareholder newsletter.

The following CEO Letter was published in the 2014 Q3 Shareholder newsletter.

This is my first letter to shareholders as your new president and chief executive officer. I want to take this time to tell you more about myself, and about Sealaska’s plan for profitability and long-term success. This is your corporation, and we will work hard to earn your pride.

I’m honored and humbled by the opportunity to work for Sealaska tribal member shareholders. I was raised in Yakutat and Juneau, Alaska and commercial fished from middle school through high school. I attended Stanford’s School of Engineering, and was then employed with Bank of America working with corporate finance departments, investment managers, private equity firms and hedge funds. In 2006 I moved home to be the chief investment officer and treasurer for Sealaska. The board felt that the 18 years of financial and investment experience I have was the right background to lead us into the next stage of our operational growth and increased profitability through acquisitions.

The board and management are committed to communicating high-level financial forecasts with shareholders. The board has directed management to create transparent communications on Sealaska’s financial status. Financial forecasting is difficult, and it often ends up being wrong, but we need to be able to describe to the shareholders how we accomplished our forecast when it is right, and describe what occurred when our forecast was off the mark.

Sealaska has always operated on a long-term strategic plan, and this plan was adjusted in 2012 to focus on sustainable profitability. Sealaska has achieved significant operating restructuring and narrowing of operations since 2012. We sold two operations that did not fit our long-term strategy—not fully aligning with our core Native values or offering little ability to provide shareholder employment. The sales that occurred and another that will occur soon accomplish two positive things: they allow us to focus our oversight on fewer operating entities that fit our long-term strategic plan, and they also provide capital to make new investments.

A very important step in fulfilling our strategic plan is securing our final land entitlement. With passage of this legislation, Sealaska will be able to continue contributing to the region’s livelihood through a sustainable timber harvest plan, and mineral development performed in an environmentally sensitive manner. The board and management share a philosophy that we need to create profit from our land, but within a strategy that requires us to protect our land, be environmentally sensitive and create “social license”, or community acceptance, to other innovative uses of our land base.

As we move forward, we have streamlined Sealaska’s government contracting and government services entities under a single holding company called Sealaska Government Services. We are confident this restructuring will provide cost savings and operational efficiencies, but will also provide a strong base for business development efforts.

Sealaska is committed to investing in the region for a sustainable Southeast Alaska, and Haa Aaní, LLC is key in this effort. Haa Aaní, LLC achieves its economic development goals by creating entrepreneurial opportunities for our communities through innovative partnerships. This scale of business development along with larger, sustainable core industries like fisheries, timber harvesting, and mineral development will contribute to a thriving Southeast region.

I want to reaffirm that Sealaska is firmly dedicated to following our core Native values and providing strong support to our cultural, educational and policy partners, such as Sealaska Heritage Institute.

To begin providing clearer information around Sealaska’s current financial status, I want to highlight that we are on a path to profitability in 2014. This is a significant turnaround from the 2013 results and we are making material strides towards our strategic goals. However, 2014 should be considered a transition year as a significant amount of change has occurred for the corporation. The sales of non-core operating entities will set us up well for future growth through acquisitions, but has the effect of bringing down our revenues in 2014.

We are moving forward with an acquisition process that will bring new net income to Sealaska, but both the income and revenue that come along with increased operating investment activity will not show material effect until 2015. This is important for shareholders to understand. I look forward to highlighting continued progress towards our strategic plans along with providing you greater information around the key milestones that will lead us towards financial sustainability.

Sincerely, Anthony Mallott

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