Board/Management Information • Oct 15, 2024
Board/Management Information
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30 September 2024
the Company
11 Financial Information of the Company
15 Changes in the Legislation Which Would Have Significant Impact on the Activities of the Company
To be a reliable, competitively preferred, environment-friendly and human conscious technology firm which preserves its sustainable growth in the global market via the values created for stakeholders, as well as serving its establishment purposes.
By focusing primarily on the needs of the Turkish Armed Forces; to provide high-value-added, innovative and reliable products and solutions to both local and foreign customers in the fields of electronic technologies and system integration; continuing activities in line with global targets as well as increasing brand awareness and contributing to the technological independence of Türkiye.
he interim report of the Board of Directors is prepared on the basis of Communiqué Series II, No: 14.1 "Principles of Financial Reporting in Capital Markets" dated 13 June 2013. T
The report comprises the events took place during the period 1 January – 30 September 2024. The title of the main shareholder in the report is ASELSAN Elektronik Sanayi ve Ticaret A.Ş and will be referred as "the Company" in the accompanying notes.
The Company's consolidated subsidiaries are ASELSAN Baku ("ASELSAN Baku"), Mikroelektronik Ar-Ge Tasarım ve Ticaret Ltd. Co. ("Mikro AR-GE"), ASELSANNET Elektronik ve Haberleşme Sistemleri Sanayi Ticaret İnşaat ve Taahhüt Ltd. Co. ("ASELSANNET"), ASELSAN Malaysia Sdn. Bhd. ("ASELSAN Malaysia"), ASELSAN Konya Silah Sistemleri Anonim Şirketi ("ASELSAN Konya"), BITES Savunma Havacılık ve Uzay Teknolojileri Yazılım A.Ş. ("BITES"), Aselsan Global Dış Ticaret ve Pazarlama A.Ş. ("ASELSAN Global"), Aselsan Sivas Hassas Optik San. Tic. A.Ş. ("ASELSAN Optik"), ASELSAN UKRAINE LLC. ("ASELSAN Ukraine") and ULAK Haberleşme A.Ş. ("ULAK").
The Company has seven branch offices; Aselsan Elektronik Sanayi ve Ticaret Anonim Şirketi EP Co. (''ASELSAN South Africa''), ASELSAN Balkans (''ASELSAN Balkans'') and ASELSAN Kıbrıs İleri Teknolojiler Araştırma Merkezi ("ASELSAN N.Cyprus"), ASELSAN Elektronik Sanayi ve Ticaret A.Ş. Katar ("ASELSAN Qatar"), ASELSAN Elektronik Sanayi ve Ticaret A.Ş. Poland ("ASELSAN Poland"), ASELSAN Latin Amerika SpA ("ASELSAN Latin Amerika") and ASELSAN Technologies Limited ("ASELSAN UAE") located in Republic of South Africa, Macedonia, Turkish Republic of Northern Cyprus ("TRNC"), Qatar, Poland, Chile and United Arab Emirates, respectively. The branches are also included in the consolidated financial statements.
he Company is a leading defense industry company developing advanced technology system solutions within land, air, naval and space platforms. T
The Company, being an establishment of Turkish Armed Forces Foundation ("TSKGV"), stands in a position of a technology center within the fields of design, development, manufacturing, system integration, modernization and after sales services of military and civil communication systems, avionics systems, electronic warfare and intelligence systems, radar systems, command and control systems, naval warfare systems, security systems, transportation systems, energy systems, traffic and automation systems, medical systems, electro-optic systems and products.
The Company has been organized under five divisions with regard to production and engineering requirements of projects. These divisions comprise Communication and Information Technologies Vice Presidency (''HBT''), Microelectronics, Guidance & Electro-Optics Vice Presidency (''MGEO''), Defence Systems Technologies Vice Presidency (''SST''), Radar and Electronic Warfare Systems Vice Presidency (''REHİS''), and Transportation, Security, Energy, Automation and Health Systems Vice Presidency (''UGES'').
In addition to the Vice Presidencies above, the Company organization also includes five Vice Presidencies to fulfil the planning, monitoring and analyzing functions: Financial Management Vice Presidency, Corporate Management Vice Presidency, Technology and Strategy Management Vice Presidency, Business Development and Marketing Vice Presidency, Supply Chain Management Vice Presidency and Malatya Campus Directorate. In addition to these, there are also Legal Affairs and Office of the Private Secretary.
The Internal Audit Department and Board of Directors Planning and Coordination Department have been established under the Board of Directors.
The Company maintains production and engineering operations in Ankara, Macunköy, Akyurt and Gölbaşı campuses and engineering operations in METU Teknokent, Hacettepe Teknokent, Teknopark İstanbul, Gebze Technology Development Zone, Aselsan Temelli Campus and Aselsan Malatya Campus. Headquarters is located in Ankara Macunköy.
The Company's international, nation-wide and sectoral rankings are summarized in the table below:
| Related | Ranking | Related | Ranking | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Institution | Research / Study | Period | Current | Prior | Institution | Research / Study | Period | Current | Prior |
| Defense News Top 100 | 2024 | 42 | 47 | Research and Development Expenditures Türkiye Top 100 |
2023 | 2 | 1 | ||
| ICI 500 Top Industrial Entreprises | 2023 | 19 | 20 | Most Valuable Brands Top 100 | 2024 | 41 | 27 | ||
| Top 500 Companies | 2023 | 31 | 40 | Top 50 Firms (Universities) |
2024 | 5 | 5 | ||
| Sustainability Index Corporate Governance Index BIST Top 30 Index BIST Top 100 Market Value Ranking |
2024 | 10 | No Ranking No Ranking No Ranking 10 |
Ideal Employers (Engineering and IT) 100 Companies |
2024 | 1 | 1 | ||
| Top 1000 Exporters | 2023 | 229 | 122 | Technology Fast 50 Big Star Category |
2023 | No Ranking |
Commercial title and trade registration number of the company and contact information pertaining to its headquarters, branches and its website addresses are shown below:
| Company | Type | Country / City | Address | Telephone / Fax | Web Site | |
|---|---|---|---|---|---|---|
| ASELSAN Elektronik Sanayi ve | Head Quarters |
Türkiye | Mehmet Akif Ersoy Mahallesi İstiklal Marşı Caddesi No:16 | Tel: +90 (312) 592 1000 | ||
| Ticaret A.Ş. | 06200 Yenimahalle/Ankara Trade Registery: 31177 | Fax: +90 (312) 354 1302 | www.aselsan.com | |||
| ASELSAN South Africa | Branch | Rep. Of South Africa | Summit Place Office Park Building 2, First Floor 221 | Tel: +27 (0) 12 349 2613 | -- | |
| Pretoria | Garsfontein Road Menlyn, Pretoria, 0181 | Fax: +27 (0) 12 349 2544 | ||||
| ASELSAN Balkans | Branch | N. Macedonia Skopje |
Ankarska 29A, Skopje | -- | -- | |
| ASELSAN Cyprus Advanced | Branch | TRNC | Middle East Technical University North Cyprus Campus ODTÜ | -- | ||
| Tech. Research Center | Güzelyurt | KALTEV AR-GE Building No: E-19 99738 Kalkanlı/Güzelyurt | www.aselsan.com | |||
| Branch | Qatar | Qatar Science & Technology Park Free Zone, Street No: | ||||
| ASELSAN Qatar | 2322, Zone No: 51, Unit No: 107, Building No:153, Building Doha Name: Tech1 |
Tel: + 974 444 11 975 | -- | |||
| ASELSAN Poland Branch | Branch | Poland Warsaw |
Skylight Building, 5 th Floor, Złota 59, 00-120 Warsaw | -- | -- | |
| ASELSAN Latin America SpA | Branch | Chile | Don Carlos 2939, Oficina 803, Las Condes, Región | -- | ||
| Santiago | Metropolitana, Santiago de Chile | -- | ||||
| ASELSAN Saudi Arabia Office | Office | Saudi Arabia | Riyadh Business Gate, Building: Zone D-3, GF, Unit 1 | -- | -- | |
| Riyadh | ||||||
| ASELSAN Pakistan Office | Office | Pakistan | Serena Business Complex 3 rd Level, Office No:3 Sector G-5/1 | -- | -- | |
| İslamabad | Ramna Suhrwardy İslamabad | |||||
| ASELSAN Technologies Limited | Office | UAE | Office No. 04 30 th Floor- Tamouh Tower, Building 12 - Marina | -- | -- | |
| Abu Dhabi | Square - Al Reem Island. Abu Dhabi |
egistered capital ceiling of the Company is TL 10.000.000.000 (TL ten billion). The nominal capital of the Company is TL 4.560.000.000 (TL four billion five hundred sixty million) and is divided into 4.560.000.000 (TL four billion five hundred sixty million) shares, each having a nominal value of 1 TL. R
2.421.818.182 (two billion four hundred twenty one million eight hundred eighteen thousand one hundred eighty two) of the shares are Group A shares and 2.138.181.818 (two billion one hundred thirty eight million one hundred eighty one thousand eight hundred eighteen) of the shares are Group B Shares. All shares are in the name of the holder.
Group A shares are nominative preferred shares and 6 of the Members of the Board of Directors are elected among the Group A preferred shareholders or among the candidates presented by them.
Share distribution table of the Shareholders is presented below:
| Partners | TL Thousand |
|---|---|
| Turkish Armed Forces Foundation (TSKGV) | 3.383.302 |
| Quoted on BIST (Free Float) | 1.176.698 |
| Paid-in Capital | 4.560.000 |
| Inlation Adjusted Capital | 27.062.337 |
Within the framework of the provisions of the Company's Articles of Association, the Board of Directors consists of total 9 members comprising of 6 members to be elected from preferred shareholders or candidates nominated by group A and 3 independent members to be elected under Capital Markets Board (CMB) regulations. Information regarding the Members of the Board of Directors and Senior Executives as of publishing date of the report are as follows:
| Members Of The Board Of Directors And Senior Executives | |||||
|---|---|---|---|---|---|
| List No | Name and Positions In Other Company's Position |
Date of First | |||
| Surname | Assignment | ||||
| 1 . | Ercümend ARVAS | Chairman of the Board | Member Of The Board Of Directors of Kardemir Sanayi Ve Ticaret A.Ş. | 22 September 2023 | |
| 2 . | Alpaslan KAVAKLIOĞLU | Deputy Chairman of the Board | Deputy Minister of Ministry of Defense, Member of The Board of Directors of Turkish Parliamentarians Union | 26 April 2019 | |
| 3 . | İsmail ARI | Member | Ozyegin University Faculty Member, Member o f The Board o f Directors o f Tübitak Sage, Member o f The Executive Council of University-Industry Collaboration Centers Platform of Türkiye |
22 September 2023 | |
| 4 . | Bekir BAYRAKDAR | Member | Commissioner of Revenue Administration | 22 September 2023 | |
| 5 . | Yavuz ÇELİK | Member / Managing Member | - - | 19 June 2020 | |
| 6 . | Göksel SEVİNDİK | Member | - - | 14 June 2024 | |
| 7 . | Mustafa Murat ŞEKER | Member / Managing Member | Vice President At Presidency o f Defence Industries, Vice Chairman o f Ankara Aerospace Industry Zone, Vice Chairman of The Board of Directors of SSTEK A.Ş., Member of The Board of Directors of Asfat A.Ş. |
29 June 2021 | |
| 8 . | Ebru TÜMER | Member | Professor in Gebze Technical University | 22 September 2023 | |
| 9 . | Ahmet YOZGATLIGİL | Member | Rector o f The Middle East Technical University, Member o f The Board o f Directors o f Tubitak, Member o f The Board o f Directors o f Bilişim Vadisi, Member o f The Board o f Directors o f Saha Istanbul, Member o f The Board o f Directors of Izmir Biomedicine And Genome Center |
22 September 2023 | |
| 10. | Ahmet AKYOL | President and CEO | Member o f The Board o f Directors o f TÜBİTAK Sage, Member o f NATO Science And Technology Organization Set Panel, Member o f The Board o f Directors o f BARQ, Member o f The Board o f Directors o f SASAD, Member o f The Board o f Directors o f Saha Istanbul, Chairman o f TOBB (The Union o f Chambers And Commodity Exchanges o f Türkiye) Defense Industry Council, Member of The Board of Directors of Istanbul Finans Ve Teknoloji Üssü A.Ş. |
1 July 2022 | |
| 11. | Nuh YILMAZ | Vice President (Financial Management) |
Vice Chairman o f The The Board o f Dasal Havacılık Teknolojileri A.Ş, Chairman o f The Board o f The Directors o f Aselsan Konya Silah Sistemleri A.Ş. |
1 April 2021 | |
| 12. | Mehmet ARTAR | Vice President (Corporate Management) |
- - | 18 July 2023 | |
| 13. | Murat ASLAN | Vice President (Supply Chain Management) |
Member of The Board of Dırectors of Aselsan Sivas Hassas Optik A.Ş. | 30 July 2024 | |
| 14. | Taha YÜCEL | Vice President (Technology & Strategy Management) |
Member of The Board of Information Security Association | 1 July 2022 | |
| 15. | Özgür Taylan SARI | Vice President (Business Development and Marketing) |
Chairman o f The Board o f The Directors o f Aselsan Qatar, Member o f The Board Of Turkısh Defence And Aerospace Industry Exporters' Database |
17 August 2023 | |
| 16. | Mustafa YAMAN | Vice President and President Business Sector (HBT Sector President) |
Member o f The Board o f Directors o f Ulak A.Ş., Chairman o f The Board o f Managers o f Aselsannet, Chairman o f The Board o f The Directors o f Communication Technologies Cluster, Chairman o f The Board o f The Directors o f Aselsan Bakü |
1 July 2022 | |
| 17. | Murat KARATAŞ | Vice President and President Business Sector (MGEO Sector President) |
Member o f The Board o f Directors o f Aselsan Middle East, Chairman o f The Board o f Aselsan Sivas Hassas Optik A.Ş. |
22 January 2024 | |
| 18. | M. Mustafa AKKUL | Vice President and President Business Sector (REHİS Sector President) |
Chairman o f The Board o f Directors o f Aselsan Bilkent Mikronano A.Ş., Chairman o f The Board o f Managers o f Mikroelektronik Araştırma-Geliştirme Tasarım ve Tic. Ltd. Şti., Member of The Board of Directors of Tüyar |
1 July 2022 | |
| 19. | Zekeriyya ŞAHİN | Vice President and President Business Sector (SST Sector President) |
Member o f The Board o f Directors o f IGG-Aselsan Integrated Systems LLC., Chairman o f The Board o f Directors o f Bites Savunma Havacılık Ve Uzay Teknolojileri Yazılım Elektronik A.Ş., Member o f The Board o f Directors o f Kazakhstan Aselsan Engineering, Chairman of The Board of Directors of Aselsan Ukraine LLC. |
22 January 2024 | |
| 20. | Mehmet ÇELİK | Vice President and President Business Sector (UGES Sector President) |
Member of The Presidency's Council of Science, Technology And Innovation Policies, Principle Member of Turkish Academy o f Sciences, Member o f The Board o f Managers o f Aselsannet, Teaching Professor in KTO Karatay University Mechanical Engineering Department |
1 July 2022 | |
| 21. | Mürsel Ali KAPLAN | President of Internal Audit | - - | 6 March 2023 |
The Members of the Board of Directors are entitled with the authorizations stipulated in the Turkish Code of Commerce ("TCC") and in article 13 of the Articles of Association of the Company.
Entitled shareholders, members of the board of directors, senior executives and to their spouses as well as relatives up to second degree are not authorized to perform transactions, which may cause conflict of interest or competition with the Company and/or subsidiaries. There are no transactions conducted by board members, either on their own behalf or on behalf others, that violate the Company's transaction ban. There is no operation regarding the non-compete obligation by the members of the board.
The controls are carried out by the Internal Audit Presidency ("IAP") and Audit Committee within the parent company in order to minimize the substantial error risk on the financial statements of the Group. IAP and Audit Committee carry out their duties independent from each other but within the guidance of common objectives and targets, with the aim of observing an internal control system, which provides required controls in matters such as the reliability of the financial reporting system, the efficiency of the activities in order to eliminate the operational risks and compliance with the law. Furthermore, the efficiency and sufficiency of the internal control are supported with the directives in effect.
The total amount of the remuneration and similar benefits paid to the top level executives by the Company as for the period that ended on 30 September 2024 is approximately TL 240.407 Thousand (Majority of the amount paid consist of salary payments and benefits provided).
The Company's consolidated subsidiaries and branches are as follows:
Both our subsidiaries and joint ventures subject to consolidation fulfill their obligations regarding the tax legislation of the countries in which they operate and submit their audited financial statements and declarations regarding their tax assets/liabilities to the relevant authorities.
There is no cross-ownership relation between the companies subject to full consolidation (ASELSANNET, ASELSAN Bakü, ASELSAN Optik, ASELSAN Global, Mikro Ar-GE, ASELSAN Malaysia, ASELSAN Konya, BİTES, ASELSAN Ukraine and ULAK) and equity pick-up consolidation method (ASELSAN Bilkent, IGG ASELSAN, ASELSAN Kazakhstan, ASELSAN Jordan, TÜYAR, BARQ QSTP LLC, TEKNOHAB, EHSİM, TR EĞİTİM, DASAL, İFTÜ, ADIYAMAN Kablo) and the Company.
he Company carries on its business operations mainly in defense industry as well as in non-defense industry. According to the latest data, world defense expenditures has increased by 6,8% (the highest ratio increase in the last 15 years) reaching USD 2,44 Trillion and the ratio of total expenditures to total GDPs has realized as 2,3%. T
The summary table on the right side gives information about the top five countries, which accounted for 61% of the total defense expenditure in 2023 and Türkiye.
| Country | Expenditure | 2023-2022 | Expend./GDP | Share in the | |
|---|---|---|---|---|---|
| Rank | (m USD) | %∆ | % | World % | |
| World | 2.443 | 6,8 | 2,3 | 100,0 | |
| 1 USA | 916 | 2,3 | 3,4 | 37,0 | |
| 2 China | 296 | 6,0 | 1,7 | 12,0 | |
| 3 Russia | 109 | 24,0 | 5,9 | 4,5 | |
| 4 India | 84 | 4,2 | 2,4 | 3,4 | |
| 5 Saudi Arabia | 76 | 4,3 | 7,1 | 3,1 | |
| 22 Türkiye | 16 | 37,0 | 1,5 | 0,6 |
As of 2023, Türkiye's annual defense expenditures increased by 37% to USD 16 Billion and ranks 22nd in the world. The ratio of defense spending to GDP is 1,5%.
Due to the industry's nature, defense projects spread over years, furthermore a system project lasts approximately 5 to 6 years from its start to its delivery. As of 30 September 2024, The Group's long-term plans which have been accordingly signed as contracts spread over years amounts to USD 12,6 Billion.
The determination of target regions/countries and focusing on these markets for marketing and direct sales as well as engaging in joint productions, transfer of technology to/from international platform producers and strategic
initiatives for sales to third countries are concurrent to our sustainable growth objectives. Our structure coincides with our objective to operate in non-defense electronic fields which require high technology.
In this context, the Company, which has displayed a remarkable performance in many areas in recent years, from security to transportation, from health to energy, and especially from defense electronics, has added a new activity by entering the field of financial technologies. The entry will be reflected both in the new orders that will be received by the Company in the coming period and in the customer portfolio as a variety.
Technological research, development and testing processes of the Central Bank Digital Turkish Lira R&D project will be carried out in close cooperation with the participation of technology stakeholders. In this direction, the Central Bank signed bilateral memorandums of understanding with ASELSAN, HAVELSAN and TÜBİTAK-BİLGEM and created a "Digital Turkish Lira Cooperation Platform".
The Company's profit distribution policy is posted on www.aselsan.com website under Investor Relations/ Corporate Governance/Policies. According to the policy, at least 10% of the net profit is targeted to be distributed.
As a result of the 49th Ordinary General Assembly Meeting of the Company held on 14 June 2024; of the net profit for the period obtained from its activities in 2023;
In accordance with Article 519/(1) of the Turkish Commercial Code, General Legal Reserves amounting to TL 456.000.000,- is going to be allocated,
Out of net distributable profit to the shareholders for the period, calculated in the framework of the dividend distribution regulations and decisions of the Capital Markets Board, gross, TL 510.000.000,- (Kuruş 11,184211 per share of TL 1 and 11,184211% on the basis of the capital) (net TL 459.000.000,- Kuruş 10,06579 per share of TL 1 and 10,06579% on the basis of the capital) shall be distributed in the form of cash,
In accordance with Article 519/2 of the Turkish Commercial Code, General Legal Reserves amounting to TL 28.200.000,- is going to be allocated,
The remaining profit is going to be allocated as Extraordinary Legal Reserves,
and distribution of the cash dividends to the shareholders is decided to be distributed as of 25 November 2024.
SELSAN's Enterprise Risk Managements Policy aims; to take proper actions against uncertainties that threaten the existence of the Company and to protect corporate identity and stakeholders' interest at all conditions. Risk management is an integrated element of corporate governance. The information gathered within the scope of risk management activities in ASELSAN is integrated into decision making mechanisms. A
The "top-down" and "bottom-up" approach is being applied into Enterprise Risk Management activities together. Risks, which are significant enough to affect ASELSAN's achievement of its targets, are identified, evaluated, monitored and reported along with the risk responses and precautions to be taken. At ASELSAN; The Enterprise Risk Management process is regularly reviewed and improved. ASELSAN's employees and business processes are at the center of the Enterprise Risk Management System. In the developing and rapidly changing world, every risk that arises or increases in impact and probability is proactively followed, and the possible effects on the Company and the opportunities created by these risks are evaluated.
At ASELSAN, risks are followed under four main categories:
Strategic Risks: Risks that may prevent ASELSAN from reaching its targets in short, medium or long terms are classified under this heading. Risks under this heading include factors such as; growth and continuity, changing customer expectations, technological changes and market share.
While ASELSAN manages its strategic risks effectively; it aims to increase its backlog, increase exports and to take part in sustainable works. In order to increase ASELSAN's market share and offer new products / services, ASELSAN seizes company merger / acquisition opportunities both at home and abroad. ASELSAN also conducts business development activities successfully.
ASELSAN increases its research and development activities in order to meet changing customer expectations and changes in technology, and realizes the necessary infrastructure and technological investments. ASELSAN diversifies the geographical regions in sales, customer portfolio and the sectors in order to maintain its growth and continuity in the medium and long term.
Operational Risks: It is defined as the risks arising from errors and negligence that may occur while performing the operational activities of the company. Risks under this section include factors such as; production, supply chain, human resources, information technologies, natural disaster and terrorist attacks.
In order to ensure the continuity of the processes, in-house directives and functors have been prepared and necessary updates are being made when needed. Within the scope of the Internal Audit plan and work schedule prepared in ASELSAN, business processes are being audited and process improvements are made in line with the audit outputs.
Quality in production processes involving internal operations and suppliers is uncompromisable; where subcontractor and supplier development activities are carried without slowing down. In terms of managing Human Resources and increasing employee motivation; activities were made with the participation of employees from every level and process improvements were made. Security policies are sustained at the highest level in Information Technology applications. In this area, internal and external audits are carried out periodically and precautions are taken against probable cyberattacks and in the field of Information Technologies, business continuity in-house is provided.
Our all processes are administered by directives, quality plans, standards, audits and test instructions. Our processes have been certified by internationally accepted standards such as AS9100, ISO 9001, AQAP and CMMI so that our products and services are secured to protect quality standards. These certificates are renewed every year with the audits performed. Changes and improvements of international standards are being followed and our processes are developed accordingly.
Regarding risks, such as natural disasters, terrorist attacks, necessary precautions are taken, primarily insurances have been made, and drills are carried out.
Financial Risks: It refers to the risks arising from the financial structure and financial preferences of the company. Exchange rate, liquidity and interest rate risks are some risks under this heading.
The exchange rate risk, which is any kind of change that may occur in assets and / or liabilities as a result of exchange rate fluctuations in the future, ASELSAN aims to minimize the effect of exchange rate fluctuations by keeping the long and short foreign exchange position at a minimum level. The balance sheet methods have been used in managing the exchange rate risk. Implementations such as; making use of foreign exchange denominated loans in line with the company's export volume, matching the contract currency with the currency of the costs of the project, and signing the subcontractor contracts in line with the main contract currency are used.
ASELSAN eliminates the liquidity risk, which is known as the risk arising from default and inability to fund the assets, it monitors forecasted and actual cash flows regularly and ensures the continuity of adequate funds and credit lines by matching the maturity of financial assets and liabilities. In order to manage the interest rate risk arising from changes in assets and / or liabilities as a result of fluctuations in interest rates in the future, it conducts transactions with fixed interest rates and uses financial derivative instruments when necessary.
Compliance Risks: It refers to the risks associated with the Company's financial losses and / or loss of reputation as a result of the company's activities or the attitudes and behaviors of the company employees that are not in compliance with the legislation, regulations and standards. While conducting its activities, ASELSAN closely follows national and international standards with the best practices in the sector, and compliance with legislation and regulations is ensured at the highest level. In addition, by Internal Audit Precidency; the effectiveness of controls, compliance with legislation and ASELSAN regulations, compliance with ethical principles and controls to eliminate risks are being evaluated.
The Early Detection and Management of Risk Committee, which consists of the members of the Board of Directors, has been operating at ASELSAN since 2012 in order to ensure early detection of risks that may endanger the existence, development and continuity of the Company, to take necessary measures related to the identified risks and to manage the risks. The Chairman of the Committee is an Independent Board Member.
Committee; carries out its own activities in full compliance with the regulations of the Capital Markets Board and all the related legislation, especially article 378 of the Turkish Commercial Code No. 6102. In addition, the Early Detection of Risk System and Committee, established by ASELSAN, is subjected to independent audits annually and the Auditor Report stating that the activities performed is sufficient, is submitted to the Board of Directors. Committee conducted 4 meetings by the end of third quarter of 2024 in order to follow the works on early detection and management of risks and to make evaluations about this issue. The reports containing the works of the Committee were being submitted to the Board of Directors periodically.
At ASELSAN, spreading risk management to the Company culture and creating risk awareness in each employee are among the basic elements that ensure the success of the Corporate Risk Management System. In this context, "Corporate Risk Awareness Training" and "Climate Change Risk and Opportunity Studies at ASELSAN" have been added to the vocational and on-the-job training programs of all ASELSAN personnel. It has become compulsory to take these trainings.
ASELSAN has been continuously working within the scope of Carbon Disclosure Project (CDP) Climate Change since 2010, achieving scores above the global and national averages. It continues to work as a climate leader in every field by getting the A- grade in CDP Water Reporting.
According to the "Global Risks Report 2024" published by the World Economic Forum, as in previous years, the most important risks evaluated according to probability and impact level for the next decade are climate change risks.
ASELSAN continues to take the necessary actions for the management of climate change risks and a sustainable world, especially CDP Climate Change reporting, and maintains its place among the world's important defense industry leaders in this regard. In this context, it has made climate change and environmental risks, which are among the most important risks of our age, a part of the corporate risk system.
he guidance under the normal conditions regarding the Group's consolidated financial results for the 2024 year are presented below: T
| Non-inflation Adjusted | Inflation Adjusted | |
|---|---|---|
| Financial Targets of 2024 | Amount Ratio | Amount Ratio |
| Revenue Growth (TL) | >70% | >10% |
| EBITDA Margin (Adjusted without | ||
| Foreign Exchange Rate Differences) | >26% | >22% |
| Capital Expenditures | 12.000 Million TL | 14.000 Million TL |
The Company, which has been in the most prestigious Defense Industry list since 2008, "Defense News Top 100", published by "Defense
News" magazine, aims to increase its ranking in the list in following years. Ranking 47th in the 2023 list and ranking 42nd place in the 2024 list.
In order to achieve the sustainable growth:
The most substantial financial resources of the Company comprise the advance and interim payments taken within the scope of the contracts signed and profits generated by the main activities.
During the period between 1 January – 30 September 2024, the cash requirements were met with the available cash, cash inflows from operations and loans.
As of 30 September 2024, there is a loan balance amounting to USD 979 Million.
As for the annual budgets and implementations for the period 2023-2024, the Group have adopted the principles as the basis to take care of savings in all kinds of expenditures, to follow up the advances and receivables closely, to pay attention to the proportion of the term and currency in purchasing and sales agreements and the risk status of the domestic/foreign suppliers and sub-contractors.
The Group, as a leading defense industry establishment, develops advanced technology system solutions on land, air, naval and aerospace platforms, places great importance to Research and Development activities and technological gains since it was founded.
By following up on all kinds of technological developments pertaining to land, air, naval and aerospace platform product/system technologies, the Company not only applies technology but also designs, develops and produces product/system technologies in order to share or sell with/to national and international collaborations.
Projects are striving at maximum level in order to benefit from the technological opportunities existing in the country aiming to increase the national contribution share. For this purpose, cooperation is made with universities and various R&D organizations and importance is given to the use of local suppliers and subcontractors.
As for the projects carried out within the Group, Research and Development center application pursuant to the Law regarding the support of Research and Development activities numbered 5746 is being implemented. As for non-public R&D projects, the approval of TEYDEB (Technology and Innovation Support Programs Directorate) and ARDEB (Research Support Programs Presidency) are received and supported by the institutions.
Within the Company, there are 11 Research and Development centers within the scope of Defense System Technologies (SST-1 and SST-2), Radar Electronic Warfare and Intelligence Systems (REHİS), Microelectronics, Guidance and Electrooptics (MGEO-1 and MGEO-2), Communication and Information Technologies (HBT), Transportation, Security, Energy, Automation and Medical Systems (UGES-1 and UGES-2), Information Management Director (BYD) as well as Middle East Technical University (Teknokent and Titanyum). Currently, 7.828 staff are employed at the Group's Research and Development centers.
The Company also carries on its activities at METU Teknokent, Hacettepe Teknokent, and
Teknopark İstanbul within the scope of the Law numbered 4691 on Technology Development Regions. 3 staff at METU Teknokent, 54 staff at Teknopark İstanbul, 4 staff at Teknopark Hacettepe and 8 staff at Gebze IT Valley are employed.
Directing the Company's resources to profitable, high value-added fields, where advanced technology is used, is anticipated in the first place by considering the global tendencies, technological developments and the actual and prospective requirements of all customers, particularly Turkish Armed Forces. The investments within the Company are carried out after detailed consideration of the technological plans, strategic plans and project requirements.
During the current period, the investments, which will meet the needs of infrastructure and equipment in order to be used in research and development projects have been sustained in compliance with the investment scheme in accordance with the policy of efficient use of resource.
Income tax withholding incentive, insurance premium support, stamp tax exemption and Research and Development incentives are utilized within the scope of the Law numbered 5746. In accordance to the Law regarding the Incentive of Research and Development Activities numbered 6676 published on Legal Gazette numbered 29636 on 26 February 2016 and The Law Regarding the Amendments on Delegated Legislation, the content of the law and incentives has been broadened and additional exceptions has been given. Income tax withholding incentive, insurance premium support and stamp tax exemption are utilized by being calculated over the salaries of the Research and Development personnel and not being paid to the relevant institution and the Research and Development discount is utilized by means of applying a discount on the corporate tax return. Aforesaid law is valid until the date of 31 December 2028.
Within the scope of the Teknokent Law numbered 4691, incentive on withholding income tax, insurance premium support and stamp tax exemption are applied. These are utilized by making calculations on Research and Development and software personnel wages and not being paid to the related institution. The gain obtained with reference to the execution of Technology Development Zones Law numbered 4691 is exempted from the corporate tax of 31 December 2028.
Between the period 1 January – 30 September 2024 because of having Research and Development centers, TL 2.941.682 Thousand within the scope of income tax withholding incentive, promotion of insurance premium, stamp duty exception; as a result of being active at ODTÜ Teknokent (as of March 2024 restructered as Research and Development Center), Gebze Informatics Valley and İstanbul Technology Development Area Technopark TL 276.249 Thousand incentives have been used. Within the scope of the Research and Development Law No 5746 and Teknokent Law No 4691, TL 1.052.479 Thousand Corporate Tax advantage has been gained as of 1 January – 30 September 2024 period.
At the periods when Group's Research and Development expenses, which is subject of Research and Development discount, is higher than the principal amount of Research and Development discount which is indicated at corporate tax return, Corporate Tax ratio is 25% of distinction amount is evaluated as deferred tax income at financial tables.
Subject to the Tübitak Academic Support Programs; there is one ongoing project in the 1003 –Priority Areas R&D Projects Support Program, and four ongoing projects in the 1004- Center of Excellence Support Program.
Subject to the Tübitak, one project in the 1511- Research Technology Development and Innovation Projects in Priority Areas (Technology Focused Industrial Movement Program), one project in the 1515-Frontier R&D Laboratory Support Programme. The application was removed from the programs for large-scale organizations; SMEs were left under the program
based on the changes made on the 1501-Industry R&D Projects Support Program on 1 July 2019. The 1007 Public Institutions Research and Development Project Support Program has been formed in order to meet the requirements of the Public Institutions with Research and Development or to support the projects aimed at solving their problems. In scope of this support six Research and Development projects and one Horizon Europe Programme are still ongoing.
The incentives for the related programs are used periodically. In addition, there are eight projects carried out in the Tübitak 1707 Order-Based R&D Projects Program.
There is one ongoing project within the scope of Tübitak 2247-A National Outstanding Researchers Program.
Incentives were received from Turquality and Support and Price Stability Fund (DFIF) due to the Market research, fair, and library support activities (TL 42.888 Thousand). Supports are received within the scope of TUBITAK projects. (TL 1.895 Thousand).
Within the context of "Taxes and Funds Exemption Certificate" received from Republic of Türkiye Ministry of Trade in order to increase exports and gain competitiveness in international markets, stamp duty and fee exemptions are used in export sales and deliveries and foreign exchange gain activities. (TL 177.045 Thousand)
Within the Decision Regarding the Governmental Grant in Investments, there are twelve Investment Incentive Certificates taken from the Turkish Republic Ministry of Industry and Technology General Directorate of Incentives and Implementation. With such incentive certificates, VAT exemption and customs tax exclusion are utilized (TL 241.467 Thousand). VAT exemption is applied to our purchases, which are used for our deliveries subject to VAT 13/f Article and our exports (TL 3.343.208 Thousand).
The Company can conduct complicated projects through its own integrated system architecture by means of knowledge, highly developed R&D infrastructure, well-equipped production lines and facilities.
According to the relevant sales agreement terms and conditions, the Company's revenue from projects contains order-based production, mass production product sales, services, commodities and progress billing sales. Sales terms and conditions are subject to change as for the respective agreements.
Substantial part of production has been realized based on orders. All related processes are being managed efficiently since product requirements, quantities and prices are different. Works in order to perform distinctive business development and marketing activities in global markets to increase efficiency in international markets and exports have been continued. As of 30 September 2024, net sales increased by 14% to TL 60,7 Billion and export to net sales ratio is 13,2%.
As of 30 September 2024, the Group's financial statements prepared in accordance with the Communiqué Series II, No: 14.1 "Communiqué on Capital Market Financial Reporting Standards" issued by Capital Markets Board. Based on this, financial ratios are presented as below.
| Financial Ratios | September 24 | Dec 23 |
|---|---|---|
| Current Ratio | 1,52 | 1,45 |
| Liquidity Ratio | 0,53 | 0,58 |
| Short Term Current Liabilities / Total Financial Liabilities | 90,4% | 94,3% |
| Total Financial Liabilities / Total Assets | 15,7% | 13,2% |
| Gross Profit Margin | 30,9% | 27,3% |
| Operating Profit Margin (EBIT) | 20,0% | 17,2% |
| Adjusted EBITDA Margin (*) | 23,7% | 21,8% |
| Net Profit Margin | 10,0% | 10,0% |
| Return On Equity (ROE) | 9,8% | 8,7% |
| Net Working Capital / Net Sales | 54,1% | 47,4% |
| Return on Assets (ROA) | 5,8% | 5,0% |
* General administrative expenses, marketing expenses and research and development expenses are substracted from and current period's depreciation and amortization expenses are added to
the gross profit in calculation of Adjusted EBITDA value. Other operating income and other operating expenses are not included in the calculation.
With the decision taken on 17 March 2005, the CMB has announced that, effective from 1 January 2005, the application of inflation accounting is no longer required for companies operating in Türkiye and preparing their financial statements in accordance with CMB Accounting Standards and therefore the preparation and presentation of financial statements in accordance with International Accounting Standard 29 "Financial Reporting in Hyperinflationary Economies" is no longer required.
On 23 November 2023, Public Oversight Accounting and Auditing Standards Authority ("POA") announced the application of inflation accounting in Türkiye and according to the announcement, financial statements of entities applying TFRS for the annual reporting period ending on or after 31 December 2023 should be presented as adjusted for the effects of inflation in accordance with the related accounting principles in TAS 29.
As of the date of these financial statements, inflation adjustment has been made in accordance with TAS 29 while preparing the financial statements dated 30 September 2024, 31 December 2023 and 30 September 2023.
IAS 29 requires that financial statements prepared in the currency of a hyperinflationary economy be stated in terms of the measuring unit current at the balance sheet date and that corresponding figures for previous periods be restated in the same terms using the general price index. One of the conditions that require the application of TAS 29 is a three-year cumulative inflation rate of approximately 100% or more. In Türkiye, based on the consumer price index ("CPI") published by the Turkish Statistical Institute ("TURKSTAT"), the cumulative rate was 343% for the three-year period ended 30 September 2024 (31 December 2023: %268).
TAS 29 should also be applied if there are signs of hyperinflation, such as the public keeping their savings predominantly in foreign currencies, prices of goods and services being determined in foreign currencies, interest rates, wages and prices being linked to general price indices, and prices being determined with a maturity difference to compensate for losses in purchasing power, including shortterm transactions, although there is no increase in price indices at the level mentioned above.
Adjustments for inflation have been calculated based on the coefficients calculated using the Consumer Price Index in Türkiye published by the Turkish Statistical Institute. As of 30 September 2024, the indices and coefficients used in the restatement of the accompanying financial statements are as follows:
| Period | Index | Correction Coefficient |
|---|---|---|
| 30 September 2024 | 2.526,16 | 1 |
| 31 December 2023 | 1.859,38 | 1,35860 |
| 30 September 2023 | 1.691,04 | 1,49385 |
| 31 December 2022 | 1.128,45 | 2,23861 |
As of the balance sheet date, all items other than those stated in terms of current purchasing power are restated by using the relevant consumer price index coefficients. Prior year amounts are restated in the same way.
Financial statements of previous reporting periods have been restated to reflect the current purchasing power of money at the latest balance sheet date. The current period restatement factor has been applied to the prior period financial statements.
Monetary assets and liabilities are not restated because they are expressed in terms of the purchasing power of money at the balance sheet date. Monetary items are cash and items to be received or paid in cash.
Non-monetary assets and liabilities are restated by reflecting the changes in the general price index from the date of acquisition or initial recognition to the balance sheet date in their acquisition costs and accumulated amortization amounts. Accordingly, property, plant and equipment, intangible assets, right-of-use assets and similar assets are restated to their acquisition values, which do not exceed their market values. Depreciation has been restated in a similar manner. Amounts included in shareholders' equity have been restated by applying the consumer price indices for the periods in which such amounts were contributed to or arose within the Company.
All items in the income statement, except for the effects of non-monetary items in the balance sheet on the income statement, have been restated by applying the multiples calculated over the periods when the income and expense accounts were initially recognized in the financial statements.
The gain or loss arising on the net monetary position as a result of general inflation is the difference between the restatement adjustments to non-monetary assets, equity items and income statement accounts. This gain or loss on the net monetary position is included in net profit.
All items presented in the statement of cash flows are restated for the effects of inflation in the measuring unit current at the end of the reporting period. The effect of inflation on cash flows from operating, investing and financial activities is attributed to the related item and the monetary gain or loss on cash and cash equivalents is presented separately.
"Corporate Governance Compliance Report" and Sustainability Principles Compliance Framework Report will be announced in the year-end report of the Board of Directors.
The lawsuits and execution proceedings filed by or against the Group as of 30 September 2024 are summarized in the table:
| September 24 | ||
|---|---|---|
| Statement | (TL Thousand) | |
| Ongoing lawsuits filed by the Group | 43.721 | |
| Execution proceedings carried on by the Group | 772.090 | |
| Lawsuits proceedings carried against the Group | 41.188 | |
| Execution proceedings carried against the Group | 17.045 | |
| Lawsuits finalized in favor the Group within the period | 4.659 | |
| Lawsuits finalized in against of the Group within the period | 3.407 |
There has not been any final judicial decision against the Group due to the responsibility related with work accidents within the period.
a) Changes in the Articles of Association
There are no changes in the Articles of Association within the reporting period.
The Group recruited a total number of 1.360 people as the personnel including fixed-term contracted personnel, disabled and terror-stricken personnel during the period 1 January – 30 September 2024 and the number of people quit for the same period is 724.
The rights and benefits provided to the personnel by the Company are bonus payments, meal allowances, marriage benefits, maternity benefits, life insurance, transportation, private health insurance, and childcare and kindergarten benefits. The average number of personnel employed by the Group as of 30 September 2024 is 12.226.
c) If it is an affiliate company, the legal transactions carried out in favor of the parent company or its affiliate with the parent company, with an affiliate company connected to the parent company with the direction of the parent company and all other measures taken or avoided to be taken in favor of the parent company or its affiliate in the previous activity year
There has not been such an event within the reporting period.
d) If it is an affiliate company, whether any counter performance was realized for each legal transaction according to the known status and conditions at the time the legal transaction mentioned in article c was realized or at the time the measures were taken or avoided to be taken and whether the company incurred losses due to the taken or avoided measure and if the company incurred losses to observe whether this was equalized or not
There has not been any material event that affects the Company's financial statements within the period.
e) Information Regarding the Donations and Social Responsibility
Within the period of 1 January – 30 September 2024, the donation amount made by the Group is TL 57.391 Thousand.
f) Events After the Reporting Period
After the reporting period, the Group has signed contracts amounting to USD 28 Million.
BETWEEN 1 JANUARY – 30 SEPTEMBER 2024
Prof. Dr. Ercümend ARVAS Chairman of the Board of Directors
Alpaslan KAVAKLIOĞLU Vice Chairman of the Board of Directors
Dr. İsmail ARI Member of the Board of Directors
Bekir BAYRAKDAR Member of the Board of Directors
Yavuz ÇELİK Member of the Board of Directors
Göksel SEVİNDİK Member of the Board of Directors
Mustafa Murat ŞEKER Member of the Board of Directors
Prof. Dr. Ebru TÜMER Member of the Board of Directors
Prof. Dr. Ahmet YOZGATLIGİL Member of the Board of Directors
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