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Investor PresentationMay 2016
2
AMERICAS$678B
EUROPE
$328B
AFRICA$37B
ASIA & OCEANIA$436B
2015 TOTAL SPENDING: $1.676 B
THE WORLD MILITARY SPENDING BY REGION, 2015
Source: SIPRI
% difference in spending 2014 vs 2015(based on 2011 constant prices & exchange rates)
~%-15 ~%-26 ~%8~-%4
Source: SIPRI
As being the 2nd biggest army in NATO, Turkey has healthy growth rate of defense budget.
MILITARY SPENDING as % of GDP (TURKEY)
3
2,5%
2,3% 2,3%
2,6%
2,4%
2,2%2,3% 2,3%
2,2%2,1%
0
200
400
600
800
1.000
1.200
1.400
0,00%
1,00%
2,00%
3,00%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
GD
P (
Bil
lio
n $
-n
om
inal
ter
ms)
Mili
tary
Sp
en
din
g a
s %
of
GD
P
TURKEY’S MILITARY SPENDING vs GDP
2,443,09 2,90
3,714,38
4,76 5,08 5,10
8,00
0,00
2,00
4,00
6,00
8,00
10,00
2007 2008 2009 2010 2011 2012 2013 2014 … 2016G
Bill
ion
US
$
Turkish Sector Revenue
0,620,78 0,83 0,85
1,091,26
1,57
1,862,00
0,00
0,50
1,00
1,50
2,00
2,50
2007 2008 2009 2010 2011 2012 2013 2014 … 2016G
Bill
ion
US
$
Turkish Sector Export Revenue
345
510 505
666 672
772
926 887
1.200
0
200
400
600
800
1.000
1.200
1.400
2007 2008 2009 2010 2011 2012 2013 2014 … 2016G
Mill
ion
US
$
Turkish Sector R&D Expenditure
Source: SASAD
RealizedGovernment Goal
4
36,7%41,6% 44,2% 45,7%
52,1% 54,0%
70,0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2006 2007 2008 2009 2010 2011 … 2016G
Local Content in UDI's Procurement
Turkey’s defense procurement strategy targeting self sufficiency and favoring local production.
TURKISH DEFENSE INDUSTRY IN YEARS & GOVERNMENTAL TARGETS
Source: Defense News Top 100 Worldwide List
5
$309$423 $488
$643$762
$848 $862
$1.101 $1.109
0 $
200 $
400 $
600 $
800 $
1.000 $
1.200 $
2006 2007 2008 2009 2010 2011 2012 2013 2014
Mill
ion
s U
S $
ASELSAN Global Defense Ranking
ASELSAN Defense Revenue
97.90.
93.
86.80.
76. 74.
67. 62.
Turkey’s leading defense company continuing its rise in global defense industry & ranking 62nd worldwide.
ASELSAN’S PROGRESS OVER THE YEARS
6
Other0,12%
BISTFree Float
15,30 %
Turkish Armed Forces
Foundation
84,58 %
ASELSAN is the only defense company that is listed in Borsa Istanbul (BIST).
SHAREHOLDERS
TAFF BOARD OF TRUSTEES
TAFF
ASELSAN TAI ROKETSAN HAVELSAN ASPİLSAN İŞBİR
• TAFF was established by the merger of Land, Navy and Air Forces Foundations.• TAFF’s objective is to enhance the warfare capability of Turkish Armed Forces through national defense industry.• Managed by the Board of Trustees formed of:
• Minister of National Defense (Chairman)• Deputy Chief of General Staff• Undersecretary of the Ministry of National Defense • Undersecretary of Defense Industry
• In compliance with its objective, TAFF owns several defense companies that operates in separate fields.• The only privilege TAFF has is nominating 6 members of the 9 members of Board of Directors.
7
TURKISH ARMED FORCES FOUNDATION (TAFF)
8
0%
10%
20%
30%
40%
50%
60%
70%
Improved IR effort and financial transparency have been the main drivers for the increase in interest of foreign institutional investors for ASELSAN.
SHAREHOLDERS
Foreign Ownership
Total Area 186.000 m2
Closed Area 110.000 m2
Macunköy Facilities (1979)Total Area 231.000 m2
Closed Area 54.000 m2
Akyurt Facilities (1991)
Total Area 350.000 m2
Closed Area 75.000 m2
Gölbaşı Facilities (2014)
9
FACILITIES
10
FIELD OF ACTIVITIES
DEFENSE SYSTEMS
TECHNOLOGIES
MICROELECTRONICS
GUIDANCE & ELECTRO-OPTICSRADAR, ELECTRONIC
WARFARE
TRANSPORTATION,
SECURITY, ENERGY &
AUTOMATION
COMMUNICATION INFORMATION
TECHNOLOGIES
COMMUNICATION
SATELLITE SYSTEMS
IT& CYBER SECURITY
AVIONIC
ELECTRO-OPTIC
NAVAL SYSTEMS
GUIDANCE & UNMANNED SYSTEMS
AIR & MISSILE DEFENSE
COMMAND CONTROL(C4ISR)
SECURITY
LAND & WEAPON SYSTEMS
RADAR SYSTEMS
ELECTRONIC WARFARE TRANSPORTATION
MICROELECTRONICS
MICROWAVE PRODUCTS TRAFFIC & AUTOMATION
ENERGY
SİVAS
ASELSAN HASSAS OPTİK
ANKARA
ASELSANNET
ROKETSAN
AB-MİKRO NANO
İSTANBUL
MİKROELEKTRONİK
11
Ownership: 50%Partner: Sivas OptikMalzemeleriFoundation: 2014Assets: $10,7 M
ASELSAN PRECISION OPTICS
ASELSANNET
Ownership : 100%Foundation: 2004Assets: $48,9 M Ownership : 15%
Partner: TAFFFoundation: 1988Assets: $1,1 B
ROKETSAN
MİKROELEKTRONİK
Ownership : 85%Partner: İTÜ ETAParticipation: 2010(Founded in 2006)Assets: $2,7 M
ASELSAN BİLKENT MİKRO NANO
Ownership: 50%Partner: BİLKENT UNI.Foundation: 2014Assets: $19,6 M
Assets are given as of 31.12.2015.
AFFILIATES – Local
ASELSAN SOUTH AFRICA BRANCH
IGG ASELSAN INTEGRATED SYSTEMS
ASELSAN MIDDLE EAST
ASELSAN BAKÜ
KAZAKHSTAN ASELSAN ENGINEERING
12
ASELSAN MIDDLE EAST (JORDAN)
Ownership: 49%Partner: KADDB Investment GroupFoundation: 2012Assets: $18,5 M
ASELSAN-BAKU (AZERBAIJAN)
Ownership: 100%Foundation: 1998Assets: $1,7 M
IGG ASELSAN INTEGRATED SYSTEMS(UAE)
Ownership: 49%Partner: IGGFoundation: 2011Assets: $1,9 M
KAZAKHSTAN ASELSAN ENGINEERING (KAZAKHSTAN)
Ownership: 49%Partner: Kazakhstan EngineeringFoundation: 2011Assets: $35,8 M
SOUTH AFRICA BRANCH
Ownership: 100%Foundation: 2011
AFFILIATES – Global
Assets are given as of 31.12.2015.
Total Employees : 5.048Engineers : 3.049
Engineers60%
Administrative Staff 8%
Technicians27%
Support5%
As of May 2016
13
HUMAN RESOURCES
•University-industry cooperation
• Projects carried out with universities• Internship and co-op opportunities for high school and university students•Masters and doctorate program incentives for employees•Doctorate program scholarship
• Location and fringe benefits
• Back to Turkey Project
•ASELSAN was selected as the mostly sought after company to work for by
engineering students in Turkey
• ASELSAN’s share of the total Turkish defense sector R&D spending is 43%.
• 2.913 R&D Staff (2.535 R&D Engineers)
• Cooperation with highest ranked universities of Turkey
14
As the largest R&D spender in Turkey, ASELSAN fully benefits from tax incentives on R&D activities.
ASELSAN will not pay any corporate taxes till 2023.
AN R&D COMPANY
As of May 2016
R&D EXPENSES2016 Q1
(Million USD)2016 Q1
(%)2015
(Million USD)2015(%)
Self-financed R&D Expense 19 23% 76 22%
Client-financed R&D Expense 64 77% 271 78%
Total R&D Expense 83 100% 347 100%
358
518 539
683
808
900 911
1.141 1.141
1.021
215
12 2168 67 83 85
152209 210 201
36
0
200
400
600
800
1.000
1.200
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1
Million USD
Sales Revenue Export
15
SALES REVENUE AND EXPORT
16
$3,7$3,9
$4,3 $4,4
2013 2014 2015 2016 Q1
Backlog History (Billion USD)
Our backlog is 4,4 Billion USD.
BACKLOG
17
BACKLOG
Management target is to maintain a backlog level of at least 3 x Sales Revenue.
Immense improvement in book-to-bill ratio over the past 4 years with a CAGR of 29%.
1,37
1,13
0,80
0,50
2012
CAGR +29%
20152013 2014
Book-to-Bill
4,2
3,63,6
4,5
20152013 20142012
Backlog/Sales Revenue
Undersecretariat for Defense Industries
57,4%
Ministry of National Defense
4,8%TAI
10,0%Other20,5%
Middle East 3,9%
Caspian Region2,4% Americas and
Europe1,0%
Exports7,3%
GendarmerieSedef ShipyardGeneral Directorate of Civil Registration and NationalityROKETSANThyssenkrupp Marine Systems
TL 15%
USD 61%
EUR 24%
BACKLOG DISTRIBUTION (CURRENCY)
BACKLOG DISTRIBUTION (CLIENT)
18
TL 40%
USD 40%
EUR 20%
TOTAL EXPENSE DISTRIBUTION (CURRENCY)
Labor 22%
Fixed Assets 6%
Operating Expenses
9%
Material63%
TOTAL EXPENSE BREAKDOWN
Our target is to increase foreign sales.
BACKLOG DISTRIBUTION (31.03.2016)
19
• Long Range Surveillance Radar
• Short & Medium Range Air Defense Systems (KORKUT, Air
Defense Gun Modernization, HİSAR) Serial Productions
• ALTAY Serial Production
• Long Range Air Defense Missile System
• Turkish Airborne Stand-Off Jammer
PROSPECTIVE CONTRACTS
7955
2015 Q1 2016 Q1
CAPEX(Tangible + Intangible)
(Million TL)
14,8%
22,8%
2015 Q1 2016 Q1
EBITDA Margin
19,4%
28,5%
2015 Q1 2016 Q1
Gross Profit Margin
20
24 -204
2015 Q1 2016 Q1
Operating Cash FLow(Million TL)
MARGINS
21
GUIDANCE & CAPEX
• TL Sales Revenue Growth : 16-20%
• EBITDA Margin : 18-20%
• CAPEX : 340 Mio TL
(tangible + intangible) (tangible: %45, intangible: %55)
ASELSAN’s guidance for 2016:
$110M $110M$120M $120M
2016 2017 2018 2019
CAPEX(Tangible + Intangible)
• Difficulty in increasing the number and variety of customers
• Cut-backs in defense expense budgets
• Supplier and subcontractor risks
• Global economic slowdown and financial crisis
• Foreign exchange risk
22
Important risks have been identified with regard to ASELSAN’s corporate risk management policy.
RISKS
23
‘‘Sustainability’’ is not a new concept for ASELSAN.
• ASELSAN holds OHSAS 18001:2007 Occupational Health and Safety Management System andISO 14001:2004 Environmental Management System Certificates since 2009.
• ASELSAN has been in the “Highest” category in Carbon Disclosure Project (CDP) since 2012.
• ASELSAN is listed in the Borsa İstanbul (BIST) Corporate Governance Index since its firstCorporate Governance Rating in 2012.
• Sustainability Report was first published in December 2013.
• ASELSAN, is one of the companies to be listed in the BIST Sustainability Index since its launchin November 2014.
• ASELSAN’s Corporate Governance Rating is 9,13 over 10 by December 2015.
SUSTAINABILITY
0
100
200
300
400
500
600
BIST 100 ASELSAN
31/12/2010=100
24
ASELSAN reached a market value of USD 3,2 Billion as of 31.03.2016.
PERFORMANCE of ASELSAN vs. BIST-100 INDEX (2011-2016)
25
Contact Persons
Okan TURAN
Chief Financial Officer A.
Aykan ÜRETEN
Finance Director
Pınar ÇELEBİ
Investor Relations Manager
Başak YÜCEKAYALI
Investor Relations Specialist
Address
ASELSAN Elektronik Sanayi ve Ticaret A.Ş.
Mehmet Akif Ersoy Mah. 296. Cad. No:16
06370 Yenimahalle, Ankara, TURKEY
Tel: +90 312 592 10 00
Web
www.aselsan.com
CONTACT
APPENDIX
CONSOLIDATED BALANCE SHEET (MILLION TL)
A S S E T S 31.03.2016 31.12.2015CURRENT ASSETS 2.964,0 3.092,8Cash and Cash Equivalents 340,8 681,0Trade Receivables 1.124,2 1.068,3Other Receivables 57,8 48,2Inventories 967,2 886,8Prepaid Expenses 290,0 228,7Other Current Assets 184,0 179,8
NON-CURRENT ASSETS 3.160,6 3.152,3Financial Investments 433,5 433,5Long-term Trade Receivables 368,6 375,9Other Long-term Receivables 0,4 0,4Equity Accounted Investments 38,2 41,9Property, Plant and Equipment 924,5 924,8Intangible Assets 562,0 537,5Prepaid Expenses 394,8 410,1Deferred Tax Assets 330,7 330,5Other Long-term Assets 107,9 97,7
TOTAL ASSETS 6.124,6 6.245,1
CONSOLIDATED BALANCE SHEET (MILLION TL)
L I A B I L I T I E S 31.03.2016 31.12.2015
CURRENT LIABILITIES 1.462,1 1.568,9
Short-term Financial Liabilities 301,1 357,8
Short-term Portion of Long-term Financial Liabilities 63,8 89,4
Trade Payables 485,3 577,2
Employee Benefit Obligations 19,3 21,6
Other Payables 48,1 2,9
Government Grants and Incentives 21,2 22,6
Deferred Income 260,0 261,5
Corporate Tax Liability 0,2 2,6
Short-term Provisions 251,9 220,0
Other Short-Term Liabilities 11,2 13,3
NON-CURRENT LIABILITIES 1.754,2 1.835,4
Long-term Financial Liabilities 137,0 156,1
Long-term Trade Payables 217,2 222,9
Deferred Income 1.197,3 1.269,5
Long-term Provisions 202,7 186,9
CONSOLIDATED BALANCE SHEET (MILLION TL)
31.03.2016 31.12.2015
EQUITY 2.908,3 2.840,7
Equity attributable to equity holders of the parent 2.908,0 2.840,2
Share Capital 500,0 500,0
Share Capital Adjustment 100,3 100,3
Other Comprehensive Income / Expense not to be Re-classified to Profit or Loss 201,9 201,2
Other Comprehensive Income / Expense to be Re-classified to Profit or Loss
Gain on Revaluation of Available for Sale Financial Assets 406,8 406,8
Restricted Profit Reserves 94,2 86,9
Retained Earnings 1.492,9 1.332,2
Net Profit for the Period 111,9 212,9
Non-controlling Interests 0,3 0,5
TOTAL LIABILITIES AND EQUITY 6.124,5 6.245,0
CONSOLIDATED INCOME STATEMENT (MILLION TL)
01.01.2016-31.03.2016
01.01.2015-31.03.2015
PROFIT OR LOSSRevenue 633,8 767,8Cost of sales (-) (453,0) (619,0)
GROSS PROFIT 180,8 148,8General administrative expenses (-) (38,9) (31,0)
Marketing expenses (-) (12,0) (12,5)Research and development expenses (-) (11,6) (14,8)Other operating income 44,3 109,7Other operating expenses (-) (69,5) (209,0)
OPERATING PROFIT 93,1 (8,8)Income from investing activities 8,2 0,0
Share of Losses of Equity-Accounted Investments (3,8) -
OPERATING PROFIT BEFORE FINANCIAL EXPENSE 97,5 (8,8)Financial income 27,8 0,9Financial expenses (-) (13,8) (57,3)
PROFIT BEFORE TAX FROM CONTINUING OPERATIONS 111,5 (65,2)Tax income/ (expense) from continuing operations 0,2 21,2- Current tax expense (0,2) (0,2)- Deferred tax income / (expense) 0,4 21,4
CONSOLIDATED STATEMENT OF CASH FLOW (MILLION TL)
01.01.2016-31.03.2016
01.01.2015-31.03.2015
OPERATING CASH FLOW (OCF) (204) 24
Net Profit for the Period 112 (44)
Depreciation and Amortization 26 23
Change in Inventory (68) 13
Change in Trade Receivables (54) 146
Prepaid Expenses (56) (24)
Deferred Income (74) (81)
Change in Trade Payables (92) (94)
Others 2 85
CASH FLOW FROM INVESTING ACTIVITIES (43) (79)
Capital Expenditures (20) (29)
Intangible Assets (35) (51)
Other Changes 12 1
FREE CASH FLOW (FCF) (246) (55)
The information contained herein has been prepared by ASELSAN (the Company). The opinionspresented herein are based on general information gathered at the time of writing and are subjectto change without notice.
These materials contain statements about future events and expectations that are forward-lookingstatements. Any statement in these materials that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors whichmay cause our actual results, performance or achievements to be materially different from anyfuture results, performance or achievements expressed or implied by such forward-lookingstatements. Except to the extent required by law, we assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes infactors affecting these statements.
This presentation does not constitute an offer or invitation to sell, or any solicitation of any offer tosubscribe for or purchase any securities and nothing contained herein shall form the basis of anycontract or commitment whatsoever. No reliance may be placed for any purposes whatsoever onthe information contained in this presentation or on its completeness, accuracy or fairness. None ofthe Company nor any of its shareholders, directors, officers or employees nor any other personaccepts any liability whatsoever for any loss howsoever arising from any use of this presentation orits contents or otherwise arising in connection therewith.
DISCLAIMER
