President’s Message

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Fitzgerald

PRESIDENT/CEO REPORT

PRESIDENT/CEO REPORT

April 1, 2016

Dear Bethel Native Corporation Shareholders:

Wani kalikami caurallput allragnirpak 2015-aami paivngaut.  Apyutkangqerquvet, wall’u nallunrivsiaryukuvet, qayagaurniarpecia calivimteni maani Mamterillermi.

This year marks forty-two years of successful operations for Bethel Native Corporation. The stability of the Board of Directors continues to guide the Corporation to remain focused on developing opportunities for shareholders and creating value in Bethel and beyond.  This annual report highlights the major accomplishments from the past year.  Bethel Native Corporation revenues reached $48 million in 2015 and ended the year with a pre-tax profit of approximately $4 Million.  These strong results show the Corporation remains healthy, prosperous and positioned for future success.

The 2015 dividend distribution of $3.85 per share marked twenty-eight years of consistent shareholder dividends paid out annually.  To date, in excess of $9.8 million has been paid out to shareholders since 1987. Since 2010, the dividend amount has been determined through a formula adopted by the Board of Directors.  The dividend policy states “An annual dividend shall be equal to 20% of the average consolidated pre-tax net income of the prior five years.”  This Board policy provides transparency and shareholders understand that the dividend payment is based on the Corporation’s overall performance.

With the guidance of the Board of Directors, the Corporation identified the need to expand and diversify its services and geographical presence in order to maintain growth and profitability.  In response the Corporation has reinforced its position as a construction market leader in the Bethel region and has also secured significant Federal contract work in the Lower 48, Hawaii and the Pacific Region.  Over the last year, subsidiary companies have been awarded new construction and environmental remediation contracts in Alaska, Hawaii, Guam and Japan.   The Corporation’s effort to build alliances and strategic relationships with large national and international firms have increased contracting opportunities for Bethel Native Corporation subsidiaries. We are pleased to report that Bethel Contracting currently has nearly $60 million of work under contract for the US Navy in Hawaii.  Additionally, other subsidiaries have active construction contracts totaling close to $45 million at Eielson Air Force Base near Fairbanks.

Locally, Bethel Services has over $60,000,000 worth of work being executed, building two Lower Kuskokwim School District replacement schools in the villages of Napaskiak and Kwethluk.  The Napaskiak school project with a current contract value of $28 million was awarded in April of 2014.  The civil work began in the summer of 2014 and pilling installation occurred last winter.  Throughout 2015 the structure was erected and significant interior work was accomplished.  The project is on-going and expected to be completed in the summer of 2016.  The Kwethluk school project valued at $33 million was awarded in May 2015.  Civil site preparation for this project began last summer and piling work is currently in progress.  Vertical construction will mobilize in the summer of 2016.  The project completion date is expected for the summer of 2017.

As these projects progress, Bethel Services has worked diligently to provide gainful employment opportunities to shareholders, descendants and other local residents.  Over the last four years, Bethel Native Corporation subsidiaries have made a significant impact on the local economy.  Since 2012, BNC companies have paid over $5 million in wages to local residents.  Many people have appreciated the opportunity to pursue work and gain skills in the construction trade.  The work is demanding and rewarding.  Whether the job is in a remote Alaskan village, or in a large metropolitan city, Bethel Services has high expectations for consistency, productivity and performance safety.

In addition to securing and executing work within the Bethel area, the Corporation continues to stay active in the Small Business Administration (SBA) certification programs.  Four of twelve subsidiary companies are active participants in the SBA 8(a) program, and two of those four companies have established SBA approved Mentor-Protégé agreements (MPA). Bethel Contracting has a MPA with Webcor Builders, a large construction contractor executing projects in the Pacific region and Bethel Environmental Solution has an agreement in place with TetraTech, a nation-wide environmental company.  These relationships bring unique opportunities for government contracts allowing the Corporation to continue to build its resume of work beyond Alaska’s boarders.  This growth will be especially important in the coming years as fiscal uncertainty is forecasted for Alaska with declining oil prices. The Corporation’s success in securing work outside of Alaska will help maintain needed diversification and support strong operations. Management and the Board of Directors have planned diligently to expand Bethel subsidiary capacity, to develop strategic relationships and ensure compliance with SBA program regulations.

It is important to note  that as part of the diversification strategy employed some years back, the Corporation has been successful in developing and implementing a profitable real estate acquisition and sales strategy.  This past year the recovery of the Southern California commercial real estate market presented BNC with the opportunity to divest one of its property holdings for a solid profit.  In keeping with the strategy of reinvestment and tax deferral, the funds from that sale were reinvested in a well-situated office campus in the growing Denver, Colorado commercial real estate market.

After forty-two years, Bethel Native Corporation continues to be firmly rooted in its home community, creating job opportunities, building infrastructure, and contributing to the local economy.  The Board of Directors sees value in maintaining a consistent and meaningful presence in Bethel and has worked to grow services and increase capacity here.  Even during challenging times, the Corporation remains focused on achieving its core mission, to be progressive, effective and responsible while diversifying operations for increased profitability and growth.

This year, marks ten years of serving as your President/CEO and I look forward to continuing to work with you to achieve success together.  It is truly an honor to work for the Bethel Native Corporation Board of Directors and all of the 1800 shareholders.    Aka allrakut qul’ngurtut wani uitainanemni.  Quyana ikayuraqlua, cingumaqlua-llu

Quyana cakneq,

Anastasia Hoffman

President / CEO