President’s Message

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April 1, 2017

Dear Bethel Native Corporation Shareholders:

Wani kalikami caurallput allragnirpak 2016-aami paivngaut.  Apyutkangqerquvet, wall’u nallunrivsiaryukuvet, qayagaurniarpecia calivimteni maani Mamterillermi.

This year marks forty-three years of successful operations for Bethel Native Corporation achieved through the careful guidance by the Board of Directors. Over the last four decades, the Corporation has remained focused on its core mission to develop opportunities for shareholders and create shareholder value. This annual report highlights the major accomplishments from the past year. Bethel Native Corporation revenues reached $71.8 million in 2016 and ended the year with a pre-tax profit of $3 million. These positive results show the Corporation remains prosperous, profitable and positioned for future success.

The 2016 dividend distribution of $3.08 per share marked twenty-nine years of consistent shareholder dividends paid out annually. To date, approximately $10.4 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 equals 20% of the average consolidated pre-tax net income of the prior five years. This Board policy provides transparency and shareholders see that the dividend payment is based on the Corporation’s overall performance.

The Board of Directors has maintained focus on growing and diversifying operations and as a result, the Corporation has been successful in both increasing revenues and expanding our geographical presence. In 2010, the Board of Directors established Bethel Solutions, a holding company providing centralized services for wholly owned limited liability companies and that organizational structure has contributed to continued growth. Over the last year, subsidiary companies have been awarded significant new construction and environmental remediation contracts in Alaska and throughout the Pacific coast. To date, the Corporation has achieved a backlog of approximately $180 million in contracts. The Corporation’s work to establish Small Business Administration (SBA) approved Mentor Protégé Agreements (MPA) with large national firms has been successful and resulted in increased contracting opportunities for Bethel Solutions subsidiaries. Bethel Contracting has a MPA with Webcor Builders, a large construction contractor executing projects in the Pacific region. This joint venture has been awarded construction projects in Hawaii totaling approximately $65 million and a large construction project on Camp Pendleton in California worth approximately $70 million. Bethel Environmental Solution has a MPA in place with TetraTech, a nation-wide environmental company and that joint venture is successfully pursuing work in remediation and environmental consulting. Recently, a third MPA was approved between Bethel Builders and Garney Federal. Together that joint venture will pursue large water systems contracts. These relationships bring unique opportunities for government contracting. The MPA program allows the Alaska Native Corporation subsidiaries to continue to build resumes while gaining valuable skills, capacity, depth and experience from industry leaders. The program is maintained through the SBA and Bethel Solutions employees work diligently to ensure compliance with program requirements and regulations. The MPA program has been valuable to Bethel Native Corporation, in expanding the client base, growing service offerings geographically, and increasing contract awards.

In Alaska, the construction division has been very busy and completed several large projects in Fairbanks and in the Bethel region over the last year. On Eielson Air Force Base, a joint venture formed between Absher Construction and Bethel Services completed a 168 person dormitory worth $35.5 million in December 2016. Also on Eielson Air Force Base, Bethel Federal Services completed a bowling center worth $12.3 million in 2016. Closer to home, Bethel subsidiaries completed the construction of the Napaskiak replacement school for the Lower Kuskokwim School District (LKSD). The school was constructed during a two year period, providing a variety of job opportunities for local residents and shareholders throughout that time. The contract value for that school was $28.4 million. In October, 2016, the community celebrated the opening of the Napaskiak school. Another LKSD project was awarded to Bethel Services in May 2015, the Kwethluk school project valued at $32.8 million. Civil work commenced in the summer of 2015 and vertical construction began in the summer of 2016. The building was fully enclosed before winter. Over the last year, interior work on the Kwethluk school has progressed and the project completion date is expected to be the summer of 2017. In addition to these large school construction projects, Bethel subsidiaries are also executing work locally for the Northwest Company, remodeling the Alaska Commercial Quickstop Store and constructing a 54-unit housing complex for the Yukon Kuskokwim Health Corporation (YKHC). Since 2012, BNC companies have proudly paid over $7 million in wages to local residents. On the environmental side, there was a lot of work executed in 2016 throughout Alaska. The environmental division was awarded projects in Yakutat, Nome, Pribilof Islands, Iliamna, Kodiak and other locations. Bethel subsidiaries also executed environmental contracts and environmental monitoring projects in Guam, Hawaii, Colorado and Japan. Bethel subsidiaries work to complete contracts to the client’s satisfaction, on time and within budget.

As you will see in this annual report, Bethel Native Corporation is achieving its purpose and mission while maintaining a strong and meaningful presence in Bethel. Throughout the year, the Board of Directors guides management to grow revenues and capabilities while remaining grounded at home. As a result, management works to increase local opportunities, provide local services and contribute to the local economy. That goal has been achieved annually and the Corporation is a significant part of the local economy. The success of BNC is felt in Bethel and beyond.

Serving as your President/CEO continues to be a sincere privilege and honor. The support and encouragement I have received to date is greatly appreciated. As always, I welcome your diverse opinions, thoughts, suggestions and feedback throughout the year. Quyana ikayuraqlua, cingumaqlua-llu.

Quyana cakneq,

Anastasia Hoffman

President / CEO