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SDT UZAY VE SAVUNMA TEKNOLOJİLERİ A.Ş.

Management Reports Aug 23, 2024

8878_rns_2024-08-23_24c73986-5289-4bec-b72c-c91648c8aad3.pdf

Management Reports

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Activity Report

January 1 to June 30, 2024

Vision

"To become the leading privately-owned company in Turkey within the domains of defense electronics and/or software."

Mission

"We are committed to delivering competitive and innovative technological products, along with value-added engineering solutions, to all targeted sectors in Turkey and beyond, with a special emphasis on defense, while upholding sour brand's value."

Table of Contents

  1. General Information

  2. Company's Capital Ownership Structure

  3. Organizational Structure

  4. Evolution and Background of the Company's Operational Domain

  5. Industry Focus and Market Position

  6. Capital Structure

  7. Privileged Shares

  8. Board of Directors Details

  9. Board of Directors Committees

  10. Human Resources

  11. Initiatives in Sustainability Practices

  12. Policies

  13. Financial Status

  14. Key Milestones in Company Activities and Operations

  15. Governing Body Risk Assessment

  16. Miscellaneous

1.General Information

Report Period :
January 1 to June
30, 2024
Company Name :
SDT UZAY VE SAVUNMA TEKNOLOJİLERİ ANONİM ŞİRKETİ
Trade Registry No :
200761
Address : Üniversiteler Mah. İhsan Doğramacı Bulvarı, No: 37, İç Kapı No:1,
Çankaya/Ankara
Telephone :
(0312) 210 10 15
Fax :
(0312) 210 11 21
Web Address :
www.sdt.com.tr
KEP Address :
[email protected]
Email Address :
[email protected]
Mersis No :
0757030831100016

2. Company's Capital Ownership Structure

a)-
Capital
: 58.000.000 TRY
b)-
Shareholding Structure
Company's Shareholding Structure
Share in Capital
Name of the Partner/ Name and Surname Amount
(in TRY)
Share Rate
(%)
Mehmet DORA 36.602.500 63.11
Other 21.397.500 36.89
Total 58.000.000 100%

Shareholding Structure of the Legal Entity Holding the Largest Share in Capital:

The table below provides details on the information and shareholding structure of shareholders who hold 5% or more of the Company's capital.

SDT SPACE AND DEFENCE TECHNOLOGIES INC.
Share in Capital
Name of the Partner/ Name and Surname Amount
(in TRY)
Share Rate
(%)
Mehmet DORA 36.602.500 63.11
Hedef Portföy Yönetimi A.Ş. Varlık Girişim Sermayesi Yatırım Fonu 5.800.000 10
Total 42.402.500 73.11

3. Organizational Structure

4. Evolution and Background of the Company's Operational Domain

The company was founded on February 11, 2005, with the aim of delivering competitive and cuttingedge technological products and value-added engineering services across various sectors in Turkey and internationally, with a particular focus on the defense industry. Additionally, the company aims to develop products in specific verticals through research and development within the defense sector. On July 13, 2017, it underwent a title change and has since been operating under its current name.

Initially positioned as a technology-focused firm, SDT primarily engaged in subcontracting roles for significant projects during its initial developmental phase. This involvement spanned both the design and production of electronic subsystems and the creation of value-added software. Over time, the company garnered notable success through collaborations with prominent defense industry entities.

In parallel with its project contributions, SDT transitioned into a key player within the defense sector. This evolution saw the company's involvement extend to the development of subsystem-level products, facilitated by extensive R&D endeavors. These efforts were funded not only through internal resources but also via support from the Scientific and Technological Research Council of Turkey (TÜBİTAK).

SDT specializes in the following main fields of activity:

Radar, Electronic Warfare, and Communication Systems:

  • o Radar Systems
  • o Communication Systems
  • o Electronic Warfare Systems
  • Mission Systems:
  • o Platform Management Systems
  • o Data Recording Systems
  • o Launcher Management Systems
  • Simulation Systems and Information Technologies:
  • o Air Combat Training Systems
  • o Land Combat Training Systems
  • o Naval Combat Training Systems
  • o Satellite and UAV Systems
  • o Image Processing and Data Technologies
  • o Geographic Information System-Based Digital Twin and Asset Management Technologies
  • o Cloud-based Autonomous Data Processing Technologies (SaaS)
  • Production Program Offerings:
  • o RF Jamming Systems
  • o Guidance Electronics Systems
  • o Integrated System Solutions

The Company's revenue primarily derives from project-based sales, acquired through various channels including tender procedures, project-based orders, and spot sales. Additionally, the Company may execute certain projects through business partnerships and/or cooperation agreements. In cases where projects are completed through joint ventures, revenue is distributed proportionally based on each party's share in the venture. Furthermore, the Company recognizes revenue from maintenance and service contracts, as well as recurring revenue streams.

Key milestones in the Company's Development

The Company's developmental timeline is as follows:

2005: SDT signed its inaugural contract after establishment.

2007: Concurrently, the SAR* technology development project and the first DRS** contracts with TÜBİTAK were initiated. Additionally, the Company established its office in METU Teknokent Galyum Block.

2009: SDT constructed its initial production facility at METU Teknokent. During the same year, the Company participated in the "First Weapon Subsystem" and "First Embedded Simulation System Development" projects.

2010: Initiation of the first electronic warfare system project.

2011: Inclusion in the "Defence Industry 25" list for four consecutive years.

2012: Relocation of production infrastructure to METU MET campus and realization of first indirect exports.

2013: Achievement of the first direct software export in the national satellite/space project.

2014: Contract for the first live combat training system prototype project.

2015: Formation of a business partnership for mixing systems with TAMGÖR.

2016: First direct export of a subsystem, receipt of the fastest-growing company award in the large-scale SME company category of METU Teknokent, and contract for the first guidance kit project.

2017: Transition to Teknokent Titanium region campus along with production facilities.

2018: Awarded the Defense Industry Presidency's "Highest sales amount (SME) defense industry" second prize, and commencement of the first turnkey main system simulation project with TAF.

2019: Signing of the first system integration project contract with TAF as the prime contractor.

2020: Land allocation for the forthcoming SDT campus to be constructed in HAB.

2021: Inception of the first significant software development project in the energy sector.

2022: Execution of serial production contracts for the live combat training system project for airborne platforms.

2023: Public offering of 21.12% of the Company's shares.

(* SAR: Synthetic Aperture Radar, ** VKS: Data Recording System)

5. Industry Focus and Market Position

Details regarding the sectors/markets of activity, the exporter's position within these sectors/markets, and the associated advantages and disadvantages.

Defense Industry Sector:

In line with the principles of a social state, governments are tasked with safeguarding national integrity and ensuring the security of their nations. In the contemporary landscape marked by rising geopolitical tensions and persistent threats of terrorism, countries are increasingly allocating resources to bolster their defense capabilities. Consequently, many nations are enhancing their defense infrastructure and undertaking efforts to modernize and restructure their technological frameworks. The defense industry encompasses the industrial landscape involved in the production of defense equipment and the provision of essential services crucial for national security.

Its primary sectors include:

  • Aerospace Industry
  • Military Shipbuilding Industry
  • Military Automotive and Armored Vehicle Industry
  • Rocket and Missile Industry
  • Electronic Industry
  • Military Clothing Industry

Defence Industry Sector on a Global Basis:

The defense industry sector on a global scale saw a notable increase in total expenditures, as per data from the Stockholm International Peace Research Institute (SIPRI). In 2023, fueled by the impact of the Russia-Ukraine conflict, global defense spending surged by 3.7%, reaching a staggering \$2.443 trillion. This amount represents approximately 2.3% of the world's total Gross Domestic Product (GDP). According to SIPRI's findings, the most significant rise in military expenditures occurred in Africa, with a remarkable 22.34% increase, followed closely by Europe, which experienced a 16.37% uptick.

Notably, Central Europe and Eastern Europe saw substantial spikes of 34.44% and 30.88%, respectively, attributed to heightened concerns over Russia's growing threat. In 2022, the five countries with the largest defense expenditures were the USA, China, Russia, India, and Saudi Arabia. Together, these nations accounted for 61% of the total global defense expenditure. In 2023, the top five countries with the highest defense expenditures were as follows: the USA led the pack with 916 billion USD, followed by China at 296 billion USD, Russia at 109 billion USD, India at 83.6 billion USD, and Saudi Arabia at 75.8 billion USD. As per the SIPRI Report, Türkiye secured the 22nd position with a defense expenditure of 15.8 billion USD. Analyzing the surge in military expenditures between 2022 and 2023, Algeria topped the list with a staggering 76% increase, trailed closely by Poland at 75%, Finland at 54%, Ukraine at 51%, and Denmark at 39%, primarily attributed to the perceived Russian threat (Source: SIPRI Military Expenditure Database 2022).

Turkish Defence Industry:

  • According to TIM data, the Turkish Defence and Aerospace Industry achieved an increase of 27% compared to the previous year by increasing its export success of 4.4 billion USD in 2022 to 5.5 billion USD at the end of 2023.

According to the Turkish Exporters Assembly (TIM) reports for 2024, the total value of Turkish Aerospace and Defense exports reached 2.884 billion USD during the first six months of the year. The monthly export figures are presented below.

  • -330 million 211 thousand USD in January 2024,
  • 299 million 897 thousand USD in February 2024,
  • 358 million 223 thousand USD in March 2024,
  • 350 million 396 thousand USD in April 2024,
  • 980 million 497 thousand USD in May 2024,
  • 564 million 443 thousand USD in June 2024

6. Capital Structure

Capital Representation Share Information:

Group Holder/Bearer Privilege Type Nominal Share
Value (TRY)
Total (TRY) Share Ratio
(%)
A Holder Privileged 1,00 7.500.000 12.93
B Holder Unprivileged 1,00 50.500.000 87.07
TOTAL 58.000.000 100

As per Article 9 of the Company's Articles of Association, half of the Board of Directors, totaling five members, will be elected by the General Assembly from candidates proposed by the majority of Group A shareholders. If the calculated half-member is a fraction, it will be rounded down to the nearest whole number.

In accordance with Article 12 of the Articles of Association, Group A shareholders are entitled to five voting rights each, while Group B shareholders hold one voting right each during General Assembly meetings.

7. Privileged Shares

The Company's capital is segmented into Group A and Group B shares, both of which are registered shares. As stipulated in Article 12, titled "General Assembly," of the Company's Articles of Association:

  • Group A shares possess voting privileges, with each share valued at TRY 1 granting its owner 5 votes during general assembly meetings.
  • Conversely, Group B shares lack voting privileges, with each share valued at TRY 1 entitling its owner to 1 vote in general assembly meetings.

Mehmet DORA exercises control over the management of the Company through his shareholding and ownership of privileged Group A shares. Group A shares, as stipulated in the Articles of Association. According to Article 9, entitled "Board of Directors and its Term," half of the Board's members, with a minimum of 5 members, are to be elected by the General Assembly from candidates nominated by the majority of Group A shareholders.

Should the total number of Board members be an odd number, resulting in a fractional half, the number of members nominated by Group A shareholders shall be rounded up to the nearest whole number. As outlined in Article 12, "General Assembly," each Group A share carries 5 voting rights in general assembly meetings, whereas Group B shares do not possess any privileges.

8. Board of Directors Details

The Company's management and representation in dealings with third parties are vested in the Board of Directors. The Board, composed of at least 5 members in compliance with Turkish Commercial Code and Capital Markets Law, oversees the Company's affairs and administration. Directors serve a maximum term of 3 years and may be re-elected upon the expiration of their term. The General Assembly retains the authority to change Board members if necessary.

To ensure accountability and impartiality, the General Assembly elects a sufficient number of independent directors in line with the principles of director independence outlined in the Corporate Governance Principles attached to the Capital Markets Board's Corporate Governance Communiqué No. 17.1. The selection and qualifications of independent directors adhere to the regulations of the Capital Markets Board on corporate governance.

Board members are permitted to hold positions on the boards of other companies. Meetings of the Board of Directors may be convened by the Chairman or, in their absence, by the Vice Chairman. Meeting and voting procedures are governed by the Turkish Commercial Code, requiring a majority of members for a quorum. Decisions are made by a majority of members present, as stipulated in Article 390 of the Turkish Commercial Code, including when the board convenes electronically. Members of the Company's governing body are prohibited from engaging in transactions with the Company or participating in activities that compete with its interests. During the period from January 1 to June 30, 2024, the Company's board of directors convened for a total of 8 meetings, achieving an attendance rate of 80%.

Last (5) Years Current Term / Share of Capital
Name and Surname Position Assignments Remaining
Term*
(TRY) (%)
Mehmet DORA Chairman
of
the
Board of Directors
Chairman of the Board of
Directors
Until 30.05.2025 36.402.500 63.11
Mustafa Fatih ÜNAL Vice-Chairman
of
the
Board
of
Directors
Vice-Chairman of the Board of
Directors, General Manager
Until 30.05.2025 1.347.500 2.32
Beril DORA Board Member Board Member Until 30.05.2025 0 0,00
Mehmet Veysel YAYAN Independent Board
Member
Independent Board Member Until 30.05.2025 0 0,00
Necip Yalçın
PEHLİVANTÜRK
Independent Board
Member
Independent Board Member Until 30.05.2025 0 0,00

(*) The board members were elected during the Ordinary General Assembly Meeting held on May 30, 2024.

ROLES OF THE MEMBERS OF THE BOARD OF DIRECTORS APART FROM THE PARTNERSHIP
Name and
Surname
Title in Company Role Continuation
of Duty
Capital
Amount (in
TRY)
Capital
Share (in
TRY)
Capital
Share (%)
Dormak İthalat
İhracat Mümessillik
ve Danışmanlık
Ticaret A.Ş.
Chairman of
the Board of
Directors,
Shareholder
Continues 27.000.000 27.000.000 100
Mehmet DORA Dorsan Uzay ve
Havacılık Savunma
Sanayi Taahhüt ve
Ticaret Ltd. Şti.
Manager,
Shareholder
Continues 150.000 72.000 48
Dorsav Teknik
Lojistik ve Ticaret
A.Ş.
Chairman of
the Board of
Directors,
Shareholder
Continues 50.000 24.000 48
Mehmet DORA
Real Person
Enterprise
Business
Owner
Continues 10.000 10.000 100
Necip Yalçın
PEHLİVANTÜRK
MİTAŞ Endüstri
Sanayi Ticaret A.Ş.
Board Member Continues 1.000.000.000 0 0
Mehmet Veysel
YAYAN
FNSS Savunma
Sistemleri A.Ş.
Board Member Continues 3.000.000 0 0
ROLES OF THE MEMBERS OF THE BOARD OF DIRECTORS APART FROM THE PARTNERSHIP
Name and
Surname
Title in Company Role Continuation
of Duty
Capital
Amount (in
TRY)
Capital
Share (in
TRY)
Capital
Share (%)
İMSAT İnşaat
Malzemesi
Sanayicileri Derneği
Board Member Continues - 0 0
Türkiye Çelik
Üreticileri Derneği
General
Secretary
Continues - 0 0
Beril DORA - - - - 0 0

9. Board of Directors Committees

To ensure the effective fulfillment of its duties and responsibilities, in accordance with Article 4.5 of the Capital Markets Board's Corporate Governance Communiqué No. II-17.1, the Board of Directors has decided to establish the following committees: the "Audit Committee," the "Early Detection of Risk Committee," and the "Corporate Governance Committee." The roles and responsibilities of these committees will be defined. Additionally, it has been resolved not to establish separate "Nomination" and "Remuneration" Committees; instead, these responsibilities will be integrated into the functions of the "Corporate Governance Committee."

AUDIT COMMITTEE

The Audit Committee is responsible for supervising the Company's accounting procedures, the public disclosure of financial information, independent audits, and the efficiency of the Company's internal control and internal audit system. The Company has established an Audit Committee to fulfill these duties.

AUDIT COMMITTEE
Share in Capital
Name and Surname Position TRY %
Mehmet Veysel YAYAN President - -
Necip Yalçın PEHLİVANTÜRK Member - -

EARLY RISK DETECTION COMMITTEE

The Early Detection of Risk Committee is tasked with identifying potential risks (threats and opportunities) that could threaten the Company's existence, growth, and continuity. It is responsible for implementing measures to mitigate and manage these risks, as well as reviewing the Company's risk management systems at least annually. Furthermore, corporate opportunities are regularly assessed and evaluated by this committee. The Company has established an Early Detection of Risk Committee to fulfill these responsibilities.

EARLY
RISK
DETECTION
COMMITTEE
Share
in
Capital
Name
and
Surname
Position TRY %
Necip
Yalçın
PEHLİVANTÜRK
President - -
Beril
DORA
Member - -

CORPORATE GOVERNANCE COMMITTEE

The Corporate Governance Committee is responsible for assessing the application of corporate governance principles within the company. In cases where these principles are not fully adhered to, the committee identifies the reasons behind such deviations and any conflicts of interest that may arise as a result. It provides recommendations to the board of directors aimed at enhancing corporate governance practices. Additionally, the committee oversees the activities of the investor relations department. A Corporate Governance Committee has been established to fulfill these duties.

CORPORATE
GOVERNANCE
COMMITTEE
Share
in
Capital
Name
and
Surname
Position TRY %
Mehmet
Veysel
YAYAN
President - -
Mustafa
Fatih
ÜNAL
Member 1.347.500 2.32
Emel
KOÇAK
Member - -

10. Human Resources

As of June 30, 2024, SDT employs a total of 251 personnel. The distribution of personnel at SDT Company is comprised of 71% white-collar employees and 29% blue-collar employees. In terms of gender distribution, 69% of the workforce is male, while 31% is female.

Among the SDT employees, the distribution based on job roles is as follows: 35% engineers, 28% technicians, 14% managers, 14% administrative staff, 5% program management, 3% laborers, and 1% office managers.

Sixty-eight percent of the SDT staff hold at least a bachelor's degree.

11. Initiatives in Sustainability Practices

The Sustainability Principles Compliance Framework was introduced into legislation following the announcement by the Capital Markets Board (CMB) as part of the amendment to the Corporate Governance Communiqué Serial: II-17.1, as published in the Official Gazette dated October 2, 2020, and numbered 31262. Since the company's shares commenced trading on BİAŞ on January 4, 2023, the sustainability report for 2022 has not been prepared. Adherence to sustainability principles is voluntary and is based on the "comply or disclose" principle.

The company recognizes the importance of this matter. Accordingly, professional consultancy services were engaged in 2023, and efforts toward this process will continue in subsequent periods, with outcomes incorporated into the company annual reports as appropriate.

12. Policies

INFORMATION POLICY

In accordance with the company disclosure policy, the company adheres to the principle of providing necessary information, excluding insider information, to all shareholders and stakeholders. This is done within the framework of principles such as equality, accuracy, impartiality, consistency, comprehensibility, accessibility at the lowest possible cost, and timely manner. Methods and tools used for disclosure in relations with stakeholders include Material Event Disclosures, Public Disclosure of Financial Reports, Annual Reports of the Board of Directors, and the Company Website.

METHODS USED TO ENSURE CONFDENTIALITY OF INFORMATION

The Company establishes a List of Individuals with Access to Inside Information and notifies the relevant authority of this list and any changes to it. Additionally, it periodically informs those concerned about the application of Silent Periods and Prohibited Periods.

DIVIDENT DISTRIBUTION POLICY

SDT A.Ş.'s Dividend Distribution Policy serves to outline the principles governing profit distribution in alignment with the Turkish Commercial Code, the Capital Markets Board's "Communiqué on Dividends" Serial II, No: 19.1, effective as of January 23, 2014, and other relevant legislative provisions. In distributing dividends, the Company adheres to a balanced and consistent approach that considers both shareholder interests and the Company's objectives in accordance with Corporate Governance Principles. The Board of Directors presents its proposal on dividend distribution, including its form and content, along with a dividend distribution table, which is publicly disclosed in accordance with the Capital Markets Board's regulations on the disclosure of material events.

REMUNERATION POLICY

The objective of the Remuneration Policy is to establish principles for determining the compensation of the Company's Board Members and senior executives in accordance with the CMB's "Corporate Governance Communiqué," Serial: IV No: 17.1, which came into effect upon publication in the Official Gazette dated 01.03.2014, and numbered 28871. The remuneration principles for Board Members and senior executives, given the absence of a separate Remuneration Committee, are documented by the Corporate Governance Committee. These principles consider the Company's long-term objectives and are then presented to the Board of Directors for approval.

The approved remuneration principles are separately disclosed to shareholders during General Assembly meetings, providing them with an opportunity to express their views on the matter.

INFORMATION SECURITY POLICY

Given the critical nature of the defense sector in which SDT primarily operates, ensuring information security is paramount.

With a keen awareness of this sensitivity, the company is dedicated to guaranteeing the confidentiality, integrity, and accessibility of information assets belonging to itself and its internal and external stakeholders in all organizational activities. This commitment is upheld through the implementation and maintenance of an Information Security Management System (ISMS) established within the framework of the TS ISO/IEC 27001 standard.

To achieve this, the company:

  • Abides by its legal, regulatory, and contractual obligations concerning information security.
  • Implements and sustains a risk management methodology to identify, evaluate, and control risks associated with information assets.
  • Develops suitable business continuity plans and systems to ensure the continuity of business activities with minimal interruption. These plans are implemented, tested, and continuously enhanced.
  • Conducts regular training and awareness-raising activities to enhance information security awareness among stakeholders.
  • Constantly enhances the ISMS through regular audits and reviews based on objective measurements. Control targets are established to enhance information security performance.
  • Ensures that appropriate measures are taken and necessary sanctions are imposed to manage and prevent the recurrence of information security violations.

QUALITY POLICY AND QUALITY MANAGEMENT SYSTEM

SDT, as an institution committed to fulfilling the requirements of the Quality Management System, aims to:

  • Meet customer needs in the most appropriate and competitive manner through its processes and applications.
  • Ensure sustainable growth in both foreign and domestic markets by fostering effective and efficient teams with its employees and establishing strong collaborative relationships with other companies through its products/solutions.

  • Achieve, enhance, and maintain balanced satisfaction among all stakeholders (customers, employees, shareholders, suppliers, subcontractors, business partners) and instill confidence in society through the development and production of products and services.

  • Ensure that all functions within the company operate in an integrated manner with a process-oriented approach based on measurement and improvement, managing them with data.
  • Increase and manage the competencies of all employees within the framework of the quality system in accordance with needs, focusing on continuous improvement and development. This is achieved by recognizing employees as integral parts of a larger whole and prioritizing internal information sharing.

OPTIMIZING CORPORATE INFORMATION MANAGEMENT VIA TECHNOLOGY INFRASTRUCTURE

In 2022, significant upgrades were made to the information system server and storage infrastructure as part of a comprehensive modernization initiative. By January 1, 2021, the implementation of the second phase functionalities of the Enterprise Resource Planning (ERP) application had been successfully concluded, aligning with the strategic plan's objectives to fortify the corporate infrastructure.

In pursuit of bolstering corporate memory, streamlining processes through digitization, and transitioning towards a paperless office environment, the deployment and expansion of the content management system were completed. Furthermore, infrastructure investments pertaining to internet network IT services were finalized and implemented.

SDT has obtained certifications for its Quality Management System in compliance with AS 9100 Rev D, TS EN ISO 9001:2015, TS EN ISO/IEC 27001:2017, AQAP 2310, and AQAP 2210 standards. Additionally, SDT's Quality Management System adheres to the requirements outlined in IEEE/EIA 12207, IEEE 1220, and MIL-STD-498 for engineering processes, and MIL-STD-973 and ANSI/EIA-649 for Configuration Management processes. Moreover, in 2023, CMMI Ver2.0 certification efforts were successfully concluded. Following our assessments, it has been established that the company has attained Level-3 maturity in both Development (Development-DEV) and Supplier Management (Supplier Management-SPM). This achievement positions us as the third company globally and the second company in Turkey to reach this level of maturity in these specific areas.

Furthermore, in the evaluation conducted by the Presidency of Defense Industry in 2023 as part of the Industrial Competence Evaluation and Support Program (EYDEP), the company was recognized for maintaining its competence as a category A company in the Defense Industry Capability Inventory (YETEN). The completion of Level 3 evaluation processes in both CMMI DEV and CMMI SPM further underscores the company commitment to excellence and continuous improvement.

13. Financial Status

Financial Statements and Results as of June 30,
2024
Financial Statements
for the Current
Period with Limited
Audit
Subjected to
independent
audit in prior
period
30.06.2024 31.12.2023
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents 422.330.964 313.131.222
Financial Investments 147.265.521 475.230.771
Trade Receivables 522.888.339 609.557.364
-
Trade receivables from related parties
2.139.314 4.847.695
-
Trade receivables from third parties
520.749.025 604.709.669
Other Receivables 20.502.995 22.995.352
-
Other receivables from related parties
- -
-
Other receivables from third parties
20.502.995 22.995.352
Stocks 942.938.048 902.156.203
Prepaid Expenses 143.500.810 118.828.818
-
Prepaid expenses to related parties
45.774.824 5.346.262
-
Prepaid expenses to third parties
97.725.986 113.482.556
Current Period Tax Related Assets 2.920.156 -
Other Current Assets 14.972.664 34.735.196
TOTAL CURRENT ASSETS 2.217.319.497 2.476.634.926
NON-CURRENT ASSETS
Other Receivables 545.583 680.531
-
Other receivables from related parties
- -
-
Other receivables from third parties
545.583 680.531
Financial Investments 606.488 18.388.843
Investments Accounted through Equity Method 6.554.089 2.414.719
Right of Use Assets 6.850.710 13.238.003
Tangible Fixed Assets 75.440.408 44.805.438
TOTAL ASSETS 2.580.143.760 2.759.850.625
TOTAL NON-CURRENT ASSETS 362.824.263 283.215.699
Deferred Tax Assets 121.212.698 62.147.269
Prepaid Expenses 93.451.751 75.949.053
Intangible Assets 58.162.536 65.591.843
Tangible Fixed Assets 75.440.408 44.805.438
Right of Use Assets 6.850.710 13.238.003
Investments Accounted through Equity Method 6.554.089 2.414.719
Financial Investments 606.488 18.388.843
-
Other receivables from third parties
545.583 680.531
-
Other receivables from related parties
- -
Financial
Statements for
the Current
Period with
Limited Audit
Subjected to
independent audit
in prior period
SOURCES 30.06.2024 31.12.2023
SHORT-TERM LIABILITIES
Short Term Borrowings 212.236 126.502
Short-term portion of long-term borrowings 155.962.675 14.101.775
Trade Payables 77.943.618 183.924.805
-
Trade payables to related parties
131.009 195.474
-
Trade payables to third parties
77.812.609 183.729.331
Employee Benefit Payables 37.223.699 30.127.047
Other Payables 137.885.869 7.256.974
-
Other payables to related parties
130.192.124 -
-
Other payables to third parties
Deferred Income
7.693.745 7.256.974
Current Period Profit Tax Liability 483.280.378 602.397.913
Short Term Provisions -
40.202.257
27.124.312
48.737.057
-
Provisions for employee benefits
32.850.569 37.562.635
-
Other short-term provisions
7.351.688 11.174.422
Derivative Instruments 389.356 -
TOTAL SHORT-TERM LIABILITIES 933.100.088 913.796.385
LONG TERM LIABILITIES
Long Term Borrowings - 375.481
Deferred Income 56.848.854 111.434.922
Long Term Provisions 18.971.332 17.760.922
-
Provisions for employee benefits
16.088.030 13.499.203
-
Other long-term provisions
2.883.302 4.261.719
TOTAL LONG-TERM LIABILITIES 75.820.186 129.571.325
TOTAL LIABILITIES
EQUITY
1.008.920.274 1.043.367.710
Equity attributable to equity holders of the parent 1.571.223.486 1.716.482.915
Paid-in Capital 58.000.000 58.000.000
Capital Adjustment Differences 138.631.829 138.631.829
Share Premiums/Discounts 445.494.166 445.494.166
Not to be Reclassified to Profit or Loss Accumulated Other
Comprehensive Income or Expense 845.727 216.998
Gain (Loss) on Remeasurement 845.727 216.998
Gain on remeasurement of defined benefit plans
(Losses) 845.727 216.998
Restricted Reserves 24.457.898 24.457.898
Retained Earnings 917.353.742 647.568.188
Net Profit / Loss for the Period (13.559.876) 402.113.836
Non-controlling shares - -
TOTAL SHAREHOLDERS' EQUITY 1.571.223.486 1.716.482.915
TOTAL SOURCES 2.580.143.760 2.759.850.625
Financial
Statements for
the Current
Period with
Limited Audit
01.01-
30.06.2024
Financial
Statements
for the
Previous
Period with
Limited
Audit
01.01-
30.06.2023
Current period,
not subject to
limited
independent
audit
01.04-
30.06.2024
Previous
period, not
subject to
limited
independent
audit
01.04-
30.06.2023
PROFIT OR LOSS
Revenue 764.263.988 405.669.509 495.654.651 226.912.822
Cost of Sales (584.012.968) (284.407.295) (380.026.249) (165.466.849)
GROSS PROFIT / (LOSS) 180.251.020 121.262.214 115.628.402 61.445.973
General Administrative Expenses (79.235.155) (67.845.450) (36.661.921) (28.720.391)
Marketing Expenses (24.519.349) (14.889.271) (13.379.733) (3.675.705)
Research and Development Expenses (11.144.130) (3.785.522) (7.450.087) (3.785.522)
Other Operating Income 129.678.972 23.568.734 56.540.301 14.160.777
Other Operating Expenses (109.363.928) (53.676.814) (75.337.104) (37.731.578)
OPERATING PROFIT / (LOSS) 85.667.430 4.633.891 39.339.858 1.693.554
Income from Investing Activities 61.494.157 245.911.189 19.471.486 182.534.248
Expenses from Investing Activities (856.705) (14.768) (68.574) (14.768)
Share of Profit/Loss of Investments
Accounted Through Equity Method
BEFORE FINANCIAL INCOME / (EXPENSE)
4.139.370 - 2.555.114 -
OPERATING PROFIT / (LOSS) 150.444.252 250.530.312 61.297.884 184.213.034
Financing Revenues 74.695.844 38.769.608 33.505.349 27.124.474
Finance Expenses (-) (64.541.493) (25.215.751) (10.050.994) (8.960.397)
Monetary Gain / (Loss), net (233.411.710) (126.030.212) (39.025.815) (52.180.926)
CONTINUING OPERATIONS BEFORE TAX
PROFIT / (LOSS)
(72.813.107) 138.053.957 45.726.424 150.196.185
Tax Income / (Expense) from Continuing
Operations
Current Period Tax (Expense) / Income
59.253.231 (60.501.217) 48.232.327 (11.103.378)
Deferred Tax (Expense) / Income - (37.428.430) 2.140.475 2.792.171
PROFIT / (LOSS) FOR THE PERIOD 59.253.231 (23.072.787) 46.091.852 (13.895.549)
Distribution of Profit / (Loss) for the Period
Non-controlling Interests
(13.559.876)
-
77.552.740
-
93.958.751
-
139.092.807
-
Parent Company Shares (13.559.876) 77.552.740 93.958.751 139.092.807
Per Share Earnings (0,23) 1,36 1,62 2,44

14. KEY MILESTONES IN COMPANY ACTIVITIES AND OPERATIONS

a. Company Investments in the Current Accounting Period

During the accounting period, the Company has directed investments towards consolidating its operations in response to growing business demands. This includes the consolidation of all existing premises, including those utilized for business partnership activities, into a single campus.

The new campus, spanning approximately 16,000 m2 of closed area, is being constructed on a 30,376 m2 plot of land acquired in the Ankara Space and Aviation Specialized Organized Industrial Zone in 2020. Construction is currently underway, with progress being made towards gathering all operations under one roof.

In connection with the construction investment, the project is advancing in compliance with the revised renovation permit. The initial construction activities, including the pouring of concrete for columns and the construction of garden walls, have commenced. Negotiations with subcontractors and suppliers regarding the finishing works for electrical, mechanical, and heating/cooling systems, among other components, are currently ongoing.

  • b. No significant administrative sanctions or penalties have been imposed on the Company or its Board Members.
  • c. No significant changes in legislation impacting company operations

d. Internal Control System and Audit activities

The Company currently does not have an internal control system in place. However, it undergoes independent audits and receives comprehensive certification services to ensure compliance with tax laws.

e. Resolving Conflicts of Interest between the Company and Service-Providing Institutions in Investment Consultancy and Rating

There exists no conflict of interest between the Company and institutions offering services like investment consultancy and rating.

Parent
Company's
Equity
Share
in
the
Subsidiary
Uncontrollable
Equity
Capital
Subsidiary
Shareholding
Structure
(Direct) (Direct+
Indirect)
Share
SDT
Azerbaycan/Azerbaijan
%100.00 %100.00 -
Cey
Savunma
%100.00 %100.00 -
Sirius
Tasarım
%40.00 %40.00 %60.00

f. Mutual Associates with Ownership Exceeding 5%

g. Company's acquisition of own shares

No shares were acquired by the Company.

h. Explanation regarding special and public audits conducted during the Accounting Period

RAM BAĞIMSIZ DENETİM VE DANIŞMANLIK A.Ş. has been appointed to audit the Company's financial statements for the years 2022, 2023, and 2024.

i.Lawsuits impacting company's financial position and operations

There are no lawsuits filed against the Company.

j. Information regarding Company's direct or indirect subsidiaries and share ratios

Parent Company's Equity Share in the
Subsidiary
Uncontrollable
Equity Capital
Subsidiary Shareholding Structure (Direct) (Direct+ Indirect) (Share)
SDT Azerbaycan/Azerbaijan %100.00 %100.00 -
Cey Savunma %100.00 %100.00 -
Parent Company's Equity Share in the
Subsidiary
Uncontrollable
Equity Capital
Partnership Shareholding Structure (Direct) (Direct+ Indirect) (Share)
Sirius
Tasarım Laboratuvarı Mühendislik A.Ş.
%40 %40 %60

k. Legal Transactions and Measures with Controlling Company and Affiliates: If the Company is a subsidiary of a group of companies, this section includes details on legal transactions with the controlling company, any affiliated companies, directives from the controlling company benefiting itself or affiliated entities, as well as any other actions taken or avoided for the benefit of the controlling company or its affiliates during the previous activity year.

No such transactions occurred.

l. Evaluation of previous period targets and General Assembly resolutions

The company successfully achieved its targets for the period spanning from January 1 to June 30, 2024. All resolutions set forth by the General Assembly were duly fulfilled during this period.

m. Details regarding company donations and aid within the period, and expenditures on social responsibility projects

As of June 30, 2024, there have been no donations or grants made. (June 2023- TRY 3.511.739).

n. Summary of General Assembly Meetings Held

The Company convened its Ordinary General Assembly Meeting for the year 2023 on May 30, 2024.

o. Corporate Social Responsibility (CSR) Activities

No Corporate Social Responsibility (CSR) activities were undertaken by the Company from January 1, 2024, to June 30, 2024, in relation to social rights, employee vocational training, or other initiatives with social and environmental impacts.

p. Dividend Distribution Policy

The Company's shareholders, Mehmet DORA and Mustafa Fatih ÜNAL, have unanimously agreed and committed to voting for the distribution of a minimum of 35% of the distributable profit in cash dividends for a duration of 5 years following the commencement of the Company's shares trading on the Stock Exchange.

q. Company Activities and Major Developments

A significant milestone was achieved with the signing of the "Live Virtual Simulated Training Integrated System Serial Production Project" with the Presidency of Defence Industries (SSB). This initiative aims to fulfill the requirements of the Turkish Air Force. The project involves the production and delivery of pods known as "Air Combat Maneuvering Instrument - ACMI," which will facilitate pilots in conducting combat readiness training in a live environment, utilizing ground stations and specialized software situated in their command centers.

Additionally, in 2022, the company secured a second contract for the production of ACMI Pods, this time with the Pakistan Air Force as part of an export venture. In a project analogous to the one planned in Türkiye, the pods have also been successfully integrated into the JF-17 aircraft, developed jointly by Pakistan and China. This achievement will mark a pioneering accomplishment for SDT, as it will be the first to integrate this capability into both NATO inventory aircraft and those utilized by non-NATO countries. All pod deliveries associated with this project were completed by June 2024. The project is scheduled for final completion in the last quarter of 2024.

In the last quarter of 2023, the Company initiated design and development activities for a new work package, in addition to the ongoing "Cloud Based Satellite Ground Systems Project" in collaboration with the Italian company Telespazio. This project is slated for completion by the last quarter of 2024.

Moreover, SDT successfully concluded the crucial "Phase-1" process, the primary phase of the "Seismic Data Processing, Analysis and Imaging Application Development Project," initiated in 2021 for the Turkish Petroleum Corporation (TPAO), by December 2022. By the conclusion of 2023, the initial segment of Phase-2 acceptance was accomplished successfully. The remaining Phase-2 work packages were accepted in March 2024, marking the completion of this phase, and the commencement of work on Phase 3 of the project.

The Company commenced the "Spatial Data Management System Based Digital Twin and Asset Management Project" with Offshore Technology Center (OTC), a subsidiary of TPAO, in March 2022. By December 2022, the first phase was successfully concluded, and the developed application was launched for user service. In the context of this project, SDT has garnered expertise in infrastructure and application development, particularly in advanced software technologies related to digital twin, asset management, workflow data systems integration, and data processing. Recognizing the growing significance of the digital twin concept for analyzing, designing, implementing, and monitoring needs or processes, SDT is committed to further establishing itself as a key player in this domain within our country. Development reached full completion, and a comprehensive training and transfer plan was shared with the customer. As of 2024, the final iteration of the project was delivered to the organization, and the digital twin infrastructure software developments were transferred to the OTC software development team by March 31, 2024. SDT remains dedicated to contributing to the project through warranty, maintenance, and support activities until the culmination of 2024.

The preliminary design phase of the "Göktürk Renewal Satellite Ground Station Development Project," undertaken through a partnership between TAI and SDT, was successfully concluded in the final quarter of 2023. Subsequently, the critical design phase of the project has commenced.

Additionally, as part of the SDT Göktürk-1 Mobile Satellite Ground Station Virtualization project, an agreement was established with the Italian principal contractor, Telespazio (TPZ). The project officially commenced in April 2024 and is anticipated to reach completion in the first quarter of 2025.

The Portable Comint System R&D Project was launched with the objective of creating a versatile mobile communication intelligence system capable of detecting broadband communication signals and executing precise direction detection. Within our In-House R&D Project, design and development endeavors are currently underway. The system's design incorporates materials that are not subject to ITAR regulations. Furthermore, our aim is to develop deep learning-based techniques for automatically classifying signals detected by the portable Comint system and establishing a continuously updated threat library.

SDT is actively engaged in product development initiatives under the Gökbey helicopter air conditioning control unit development and delivery project, established with a domestic customer on May 25, 2023.

In addition, SDT secured an additional order in 2023 for the Air Vehicle Control Hardware Unit, previously developed and currently utilized in unmanned aerial vehicle ground control stations. Partial deliveries were made in 2023, with the remaining shipments scheduled for 2024.

Furthermore, the Company has been fulfilling deliveries of additional orders received in 2023 for various VKS (Data Recording System) Devices developed for diverse avionic platforms. New orders will continue to be executed, with deliveries planned for 2024 and 2025.

SDT has secured orders and finalized contracts for the production of Precision Guidance Electronics, the Kâşif GPS device, various guidance electronics cards, and mission computers intended for integration into diverse land platforms. To advance these projects, the company has procured the necessary materials and commenced the production phase. Deliveries for these projects are scheduled to take place in 2024 and 2025.

Additionally, the Company has entered into a contract for the production of Local Pendant Cables for Aircraft Interceptor Systems, which are used for the emergency landing of fighter jets. This contract has been successfully fulfilled, with deliveries completed in the second quarter of 2024.

Furthermore, between January 1, 2024, and June 30, 2024, the Company secured new orders totaling USD 15.763.206.

r. Remuneration Provided to the Members of the Board of Directors and Senior Management for the Period January 1, 2024, to June 30, 2024

The Company's board of directors comprises 5 members, and there is no remuneration provided to these members as of the last annual accounting period. However, attendance fees are disbursed to the board members. During the period from January 1, 2024, to June 30, 2024, the total salaries and benefits disbursed to the board of directors and senior executives amounted to TRY 10.075.958 (compared to TRY 7.188.313, during the same period in 2023).

s. Research and Development Activities

The Company persists in its research and development endeavors aimed at designing indigenous products in the fields of radar and electronics/warfare, utilizing SDT's internal resources. These R&D activities align with the "R&D Road Map" framework, wherein the Company endeavors to allocate 20% of the income derived from public offerings.

t. Transactions with Related Parties

To mitigate potential conflicts of interest arising from transactions between the Company, its subsidiaries, and related parties such as controlling shareholders, board members, senior executives, as well as their spouses and relatives up to the second degree, prior approval from the general assembly is mandatory. Full disclosure of such transactions is also required during general assembly meetings.

Receivables and Payables Involving Related Parties

1) The specifics of sales to related parties, classified under revenue, are as follows:

01.01-
30.06.2024
01.01-
30.06.2023
Dorsan Uzay ve Hav.Sav. San.Taah.ve Tic. Ltd.Şti. 7.513.836 -
Sirius Tasarım Laboratuvarı Mühendislik A.Ş. 1.192.641 -
Tamgör Elektronik Sanayi ve Ticaret Limited Şirketi 1.210.278 6.976.036
9.916.755 6.976.036

2) The details of purchases from related parties, categorized under the cost of sales, are as follows:

01.01-
30.06.2024
01.01-
30.06.2023
Tamgör Elektronik Sanayi ve Ticaret Limited Şirketi 1.869.285 8.113.455
Gate-Tamgör Elektronik Sanayi Ticaret Limited Şirketi 751.380 665.676
Dormak İth. İhr. Müm. ve Dan. Tic. A.Ş. 589.594 38.322.054
3.210.259 47.101.185

3) The details of other income from related parties, classified under other income from operating activities, are as follows:

01.01-
30.06.2024
01.01-
30.06.2023
Tamgör Elektronik Sanayi ve Ticaret Limited Şirketi 477.366 546.379
Dormak İth. İhr. Müm. ve Dan. Tic. A.Ş. 127.595 33.046
604.961 579.425

4) The details of other expenses from related parties, classified under expenses from investing activities, are as follows:

01.01-
30.06.2024
01.01-
30.06.2023
Sirius Tasarım Laboratuvarı Mühendislik A.Ş. 396.055 -
396.055 -

u. Information regarding transactions of governing body members with the company on their own or others' behalf within general assembly permission, if any, and activities prohibited by competition

None.

v. Evaluation and analysis by the management body on financial position, operational results, achievement of planned activities, and alignment with strategic targets

None.

15. Governing Body Risk Assessment

Details of the Company's Risk Management Policy to Address Anticipated Risks:

To mitigate foreign currency risk in the current period, the Company strives to avoid the use of foreign currency-denominated debts, particularly on the liability side. Additionally, derivative products are employed to minimize exchange rate risk.

Moreover, to mitigate liquidity risk, the Company endeavors to balance purchase and payment terms to ensure sufficient cash flow. When necessary, funding is secured through loans to further minimize liquidity risk.

16. Miscellaneous

Notable events subsequent to the statement of financial position date include:

• Pursuant to Article 36 of the "Law No. 7524 on the Amendment of Tax Laws and Certain Laws and Decree Law No. 375," as published in the Official Gazette on August 2, 2024, the calculated corporate tax liability must not be less than 10% of the corporate income before accounting for any discounts and exemptions. Consequently, effective January 1, 2025, the Group's income, which is currently exempt from corporate tax, will be subject to the domestic minimum corporate tax. Although this matter is classified as "an event after the reporting period that does not require an adjustment" under the "TAS 10 Events after the Reporting Period" standard, assessments to evaluate its impact on the Group's operations, cash flows, and financial position for the year 2025 are ongoing as of the date of this report.

• At the general assembly of the Parent Company held on May 30, 2024, a decision was made to distribute a gross dividend amounting to TRY 130.192.124 in three installments. The first installment, totaling TRY 48.822.047, was paid in cash on August 13, 2024.

Mehmet DORA Mehmet Veysel YAYAN Chairman of the Board of Directors Independent Board Member

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