ANNUAL REPORT - ASELSAN · industry, and ranking 80th worldwide 7% 7% of equity capital allocated...

LEADER

ACADEMIC

STRATEGIC

SUPPORTIVEACTIVE

EFFECTIVE

NAVIGATOR

ANNUAL REPORT

36 Rising value for 36 years through accurate

strategic initiatives

80Turkey’s leading defense company

continuing its rise among the defense

industry, and ranking 80th worldwide

7% 7% of equity capital

allocated to R&D

130+ Over 130 active

projects with

innovative solutions 20+ Effective R&D collaboration with

over 20 universities on joint

projects

183+ Supporting domestic

subcontractors including SMEs

with orders over 183 Million USD

in return for work.

33% 33% of employees holding

graduate (Masters, Ph.D.) degrees

LEADER

ACADEMIC

STRATEGIC

SUPPORTIVEACTIVE

EFFECTIVE

NAVIGATOR

ANNUAL REPORT

2 ASELSAN 2011 ANNUAL REPORTCOMPANY PROFILE

AFFILIATES SHARE AMOUNT SHARE RATIO (%)

ASELSAN BAKU 1.735.212 USD 100,000

ASELSANNET 950.000 TL 95,000

ASPİLSAN 56.000 TL 1,000

HEAŞ 26.000 TL 0,051

IGG ASELSAN INTEGRATED SYSTEMS LLC 98.000 AED 49,000

KAZAKHSTAN ASELSAN ENGINEERING LLP 34.300.000 KZT 49,000

MİKES 37.578.450 TL 96,355

MİKROELEKTRONİK 55.250 TL 85,000

ROKETSAN 21.900.000 TL 15,000

SHAREHOLDERS SHARE AMOUNT (TL) SHARE RATIO (%)

TURKISH ARMED FORCES FOUNDATION 198.958.486,69 84,58

ISTANBUL STOCK EXCHANGE (FREE FLOAT) 35.993.667,09 15,30

OTHERS 271.846,22 0,12

TOTAL 235.224.000,00 100,00

Partnership StructureA leader in defense electronics

CONTENTS

AT A gLANCE

At A glAnce

2 Partnership Structure3 Company Profile4 Main Indicators6 Affiliates8 Facilities10 Divisions

MAnAgeMent

12 Message from the Chairman15 Board of Directors and Auditors 16 Message from the CEO19 Executive Board

2011 Activities

20 Highlights in 201122 2011 Activities

3At A glAnce ManageMent 2011 activities sustainability Financials

Company ProfileA company transforming knowledge into power and reliability

ASELSAN’s main strategy, as underlined by its founders during the establishment of the company, has always been to develop innovative products and systems by utilizing critical technologies.

Today, ASELSAN has been transformed to a worldwide company by producing high tech systems as a result of its successful R&D activities.

Our Vision;To become one of the top fifty defense industry companies in the world by creating values with customer oriented approach and state-of-the-art technology.

Our Mission; To design and develop indigenous systems in the fields of defense electronics by using high-end technologies surpassing customer expectations, to utilize our accumulated know-how for commercial applications, and to increase the value of our assets and resources.

Our Values; Customer Oriented Dynamic Effective Innovative Modest Socially and Environmentally Aware Reliable Team Spirit Work Discipline

sustAinAbility

51 Strategy Management52 Innovation and Technology Management 53 Human Resources Management 54 Quality Management55 Risk Management56 Productivity57 Occupational Health and Safety58 Environment

FinAnciAls

60 Consolidated Balance Sheet62 Consolidated Income Statement63 Consolidated Statement of Changes In Equity 64 Consolidated Statement of Cash Flow 65 Independent Auditor’s Report


350

Main IndicatorsPioneer company of the Turkish Defense Industry

BALANCE SHEET SUMMARY (MILLION TL) 2010 2011 CHANgE

FIXED ASSETS 272 350 29%

TOTAL ASSETS 2.273 2.392 5%

TOTAL EQUITY 885 1.019 15%

Total Equity (Million TL)

1.019885

Fixed Assets (Million TL)

29% Increase in Fixed Assets

272

2010

2010

2011

2011

Total Assets (Million TL)

5% Increase in Total Assets

15% Increase in Total Equity

2.3922.273

AT A gLANCE

2010 2011


2341.502

INCOME STATEMENT SUMMARY (MILLION TL) 2010 2011 CHANgE

Net Sales 1.212 1.502 24%

Operating Profit 183 234 28%

2010 2011 CHANgE

R&D Expenses 378 447 18%

Operating Profit (Million TL)

28% Increase in Operating Profit

183

Net Sales (Million TL)

1.212

24% Increase in Net Sales

447

R&D Expenses (Million TL)

378

18% Increase in R&D Expenses

2010 2010

2010

2011 2011

2011


AffiliatesLocal to Global

ROKETSAN

ROKETSAN was founded in 1988 with the purpose of producing all types of missiles, rockets, rocket launchers, warheads and other components. ASELSAN, owns 15% of the company’s shares.

MİKES

Founded in 1987, MİKES specializes in design, development and production of military electronic equipment, in particular combat aircraft electronic warfare self-protection systems. ASELSAN owns 97% of the company’s shares.

ASELSANNETIt was founded in 2006 with ASELSAN holding 95% of the shares to provide professional users and government entities with electronics and communication solutions and turnkey projects concerning communication system infrastructure.

MİKROELEKTRONİK

In 2010, ASELSAN became a shareholder of the company with 85% of the shares. Company is founded to design and develop complete full circuits and electronic systems.

AT A gLANCE


SOUTH AFRICA

UNITED ARAB EMIRATES

ASELSAN-BAKÜ

ASELSAN is the sole shareholder of the company. It was founded in 1988 to carry out military and professional communication equipment of the region.

KAZAKHSTAN ASELSAN ENGINEERING (KAE)

KAE was established in 2011 to provide Kazakhstan with military and professional electronics systems, of which 49% of the shares owned by ASELSAN and 1 % by the Turkish Undersecretariat for Defense Industries.

SOUTH AFRICA BRANCH

It was founded in 2011 for the design of electro-optic systems, and the marketing of ASELSAN products in South Africa and the other countries in the region.

IGG ASELSAN INTEGRATED SYSTEMS

Founded in 2011, to produce, test and integrate ASELSAN products in the United Arab Emirates (UAE), and to provide after sales support in the region. ASELSAN holds 49% of its shares.

KAZAKHSTAN

TURKEY

AZERBAIJAN

8

ANKARA

İZMİR

İSTANBUL

ASELSAN 2011 ANNUAL REPORTCOMPANY PROFILE

FacilitiesTransforming earnings into investments

NAVAL SYSTEMS GÖLCÜK LABORATORY (GÖLCÜK SHIPYARD COMMAND)Naval Systems Gölcük Laboratory (Gölcük Shipyard Command) was founded in 2011. The facility is used by naval projects engineering teams.

IZMIR FACILITY

The facility is located in the Organized Industrial Zone of İzmir to carry out Toll Collection and Traffic Systems Management and related R&D activities.

ISTANBUL NAVAL SYSTEMS MANAGEMENT (TUZLA) FACILITY

The Istanbul Naval Systems Management Facility was established in Tuzla, in 2008. The facility serves as a liaison office for the Naval Forces Command and civilian shipyards on naval systems projects and is also used for ASELSAN engineering teams.

NAVAL SYSTEMS ISTANBUL LABORATORY (ISTANBUL SHIPYARD COMMANDThe Naval Systems Istanbul Laboratory is hosting a team of engineers tasked for naval projects.

ISTANBUL PRODUCT SUPPORT MANAGEMENT FACILITY

In the region, it supports ASELSAN military and civilian systems especially toll collection and traffic management.

AT A GLAnce

ANKARA

İZMİR

İSTANBUL


MACUNKÖY FACILITIES

Macunköy Facilities are located on 186.000 m2 of total land of which 110.000 m2 is closed area. General Management, Communication and Information Technologies Division, Defense Systems Technologies Division and Radar, Electronic Warfare and Intelligence Systems Division carry out their activities in Macunköy Facilities.

AKYURT FACILITIES

The Akyurt Facilities are located on a total land area of 231.000 m2 with 54.000m2 of indoor area. The Microelectronic Guidance and Electro-Optics Division operate in the ASELSAN Akyurt Facilities.

MIDDLE EAST TECHNICAL UNIVERSITY TECHNOPOLIS FACILITY

The R&D related activities of the Communication and Information Technologies Division are carried out in Technopolis Facility located in the Middle East Technical University campus.

GÖLBAŞI FACILITIES The Ankara Gölbaşı Facilities are currently under construction. The new facilities will involve radar and electronic warfare systems for land, air, naval, space as well as unmanned platforms.

10

ANKARA

ASELSAN 2011 ANNUAL REPORTCOMPANY PROFILE

DivisionsAn asset to Turkey’s technological infrastructure

COMMUNICATION AND INFORMATION TECHNOLOGIES DIVISION

Being the initial line of business of ASELSAN, Communications and Information Technologies Division was tasked to produce tactical military radios. Having proven its competence by producing the only Software Defined Networking Radio with the capability to perform all of the functions defined by NATO; this division has placed ASELSAN among the top companies worldwide in the field of radio communications.

Fields of Activity •Military Communication Systems •Encryption and Information Security Systems •Public Safety Communication Systems •Avionic, Satellite and Naval Communication Systems

MICROELECTRONICS, GUIDANCE & ELECTRO-OPTICS DIVISION

Having started its operations in the beginning of the 90s with micro-electronic production, this division soon became Turkey’s electro-optics center. Taking important strides in R&D activities, the division now operates in the fields of avionics, flight management, navigation and guidance systems and other various areas of defense electronics.

Fields of Activity •Electro-Optic Systems •Avionic Systems and Integration •Navigation and Guidance Systems

AT A GLAnce

ANKARA


DEFENSE SYSTEMS TECHNOLOGIES DIVISION

With its expertise in systems engineering, The Defense Technologies Division offers customers a broad range of products and sophisticated system solutions such as command control, air defense systems, naval systems, underwater acoustic systems as well as systems integration.

Fields of Activity •Command Control and Computer Systems •Fire Support Systems •Weapon Systems •Naval Combat Systems •Unmanned Systems •Coast and Border Security Systems •Intelligent Transportation Systems

RADAR, ELECTRONIC WARFARE AND INTELLIGENCE SYSTEMS DIVISION

Increasing its capabilities since its foundation in 1980, this division has become Turkey’s Radar and EW center and soon to be one of Europe’s three largest microwave module producer with its prospective facilities.

Fields of Activity •Radar Systems •Electronic Warfare Self Protection Systems •Electronic Warfare Intelligence and Attack Systems


Message from the Chairman“At a time when so many countries around the world are undergoing structural shifts, the principles of the global economy are questioned, and it is increasingly more challenging to make economic decisions; we are proud to finalize another successful year.”

Dear Shareholders,

We are living in times when many countries around the world are undergoing structural shifts. The principles of the global economy are being questioned and it is becoming increasingly challenging to make economic decisions. In this context, where global dynamics are at work with unpredictable consequences, Turkey continues its march forward.

In parallel to the development in our country, we are proud to be bringing to a close another successful year in which ASELSAN improved its capabilities and opportunities.

Consistent growth maintained

We are consistently moving towards our vision of joining the fifty largest defense companies in the world. We have improved our standing in the world rankings by six positions and are currently the 80th.

With a yearly rise of 11%, we have brought our consolidated net sales to 900 Million US Dollars in 2011. Sales figures from the last five years show that ASELSAN has increased its yearly revenue 2.6 times. In parallel to these

developments, our backlog has also increased.

ASELSAN, fully confident in its future, has rapidly made investments not only to fulfill the requirements of ongoing projects but also to enable its venture into new markets.

A company recommended to stock market investors

In 2011, despite losing 22.3% of its value in the IMKB (Istanbul Stock Exchange) -National 100 Index (Composite Index), where the effects of international developments were felt, ASELSAN shares began the year at 8.24 TL, maintained their worth for the most part, and ended the year at 8.20 TL. Based on this, the market value of our company is over 1 Billion US Dollars.

Not only national investment consultants, but organizations recognized by the world’s most respected entities as well, published assessment reports recommending ASELSAN shares to their investors within the year.

Turning ASELSAN’s earnings into assets

Within the scope of our growth strategy, we have expedited our efforts regarding the ANKARA Gölbaşı Facility, an ongoing investment on 350 acres of

land. This investment will be one of the three largest facilities in Europe producing microwave modules, and will be established as the center for activities related to Radar and Electronic Warfare.

Completed in 2011, our Printed Circuit Board facility with its 11,000 m2 of closed area, is the largest facility of its kind in Turkey.

Bold international steps

2011 was a productive year for ASELSAN also in terms of its growth strategy through the establishment of international affiliates. In 2011, ASELSAN established joint venture companies with the local Kazakhstan Engineering and the Undersecretariat for Defense Industries in Kazakhstan, and with the local IGG in the United Arab Emirates. These companies will first focus on the needs of their respective countries, and are intended to serve the region in which they are located in the future.

ASELSAN’s aim is to become more active internationally and broaden the market for the products it designed and manufactured by establishing similar partnerships, in addition to strategic collaboration agreements with commercial companies, in the coming years.

13At A glAnce ManageMent 2011 Activities sustAinAbility FinAnciAls

“We reached 900 Million USD in revenue”

Hasan MeMişoğluChairman


Message from the Chairman

“With the strength afforded to us by the endorsement of our customers, we are doing our best to increase the name recognition of ASeLSAn brand on global-scale.”

ASELSAN on its way to becoming a world brand

With the strength afforded to us by the endorsement of our customers, we are doing our best to increase the name recognition of ASELSAN brand on global-scale. We plan to increase our export rates to become 25% of the revenue. The international orders we received worth 212 Million US Dollars in 2011 is a testament that we are taking great strides to this end.

It is a fact that large scale purchases are made at platform level in the global market. By the expansion of platform variety of the domestic producers; ASELSAN, as an electronic system provider, will encounter with new promising opportunities which will grant us a competitive advantage in the international arena. In particular, our collaboration with naval platform producers was accompanied by noteworthy success in our 2011 exports. We expected to attain similar successes with other platforms in the near future.

Our affiliates

Our affiliates, a source of pride for us with their great performance; i.e., MİKES, ASELSANNET, MİKROELEKTRONİK and

ASELSAN BAKÜ, have achieved their targets for 2011. Productivity is the top priority among the principles followed by our affiliates, with their increasing expertise in their respective fields of activities.

Our social responsibilities

Having confidence in what the future holds is possible only in well educated societies. With this principle in mind, ASELSAN attaches great importance to social responsibility projects in the field of education. In the past term, efforts were made to build schools in earthquake ravaged regions where education was impeded. Schools were built and equipped in the city of Muzafferabad-Pakistan, as well as in the Turkish cities Erzincan and Adapazarı. Significant improvements were made to the existing levels of two primary schools in Ankara, one in Macunköy and the other in Akyurt. Furthermore, we are working at full speed to open a new school in the second half of this year in the city of Van, Turkey.

The today and tomorrow of ASELSAN

The major priority of ASELSAN, as the leading defense industry company in our country is to develop innovative

products and designs by utilizing critical technologies. Used primarily by the Turkish Armed Forces as well as the armed forces of allied countries, our products have proven themselves in the tactical field. We aim to use our resources in the most effective way possible to reach more customers and deliver solutions involving newer and better technologies. We are working to utilize our accumulated know-how in civil areas in addition to the field of defense.

As an affiliated company of the Turkish Armed Forces Foundation, ASELSAN will continue to work with great determination to improve its position in Turkey and in the world with the support of our customers.

Respectfully yours,

Hasan MeMişoğluChairman


Board of Directors and Auditors

Members of the Board of Directors:

(02) Necmettin BAYKulVice Chairman

(03) Ahmet şeNolMember

(04) Birol eRDeMMember

(05) osman Kapani AKTAşMember

(06) erhan AKPoRAY Member

(07) M. Ayhan GeRÇeKeR Member

Chairman of the Board of Directors :

(01) Hasan MeMişoğlu Chairman

Members of the Board of Auditors:

(08) Mehmet TiMuR Member

(09) ismail DiKMeNMember

(10) Ali Rıza DADAşMember

(01)(02)(06)(08)(10) (03) (04) (05) (07) (09)


Message from the CEOAs ASeLSAn, with the dynamic structure we have built upon the principles of technological advantage and productivity, we continue our endeavors next to world giants to climb towards higher goals.”

A company with an unwavering focus on innovation and the aim to surpass customer expectations, ASELSAN has improved in many fields in 2011, achieving its highest sales value to date.

As a result of our consistent growth, we have maintained and improved our position among the world’s 100 largest defense industry companies for five years. Our top priority in the coming years will be to maintain the momentum that ASELSAN has gained.

Competitive advantage stemming from technological infrastructure

With the investments made in our four divisions focusing on different, highly complex areas of technology, we have developed our infrastructure and acquired new capabilities. The number of active projects carried out at our divisions, each of which is an R&D Center, reached 130 by the end of 2011.

Utilizing the advantage offered by the collection of various capabilities under ASELSAN’ s roof, we are able to design complex platform solutions such as MILGEM with an active, flexible, common system architecture. With the dynamic structure we have built upon the principles of technological advantage

and productivity, we continue our endeavors next to world giants to climb towards higher goals.

Continuing R&D targeting user needs

ASELSAN, with its 36 years of experience, is a well-established company with a high capacity for transforming R&D into actual products. Even in periods rife with economic problems, we did not make any concessions from our R&D. In fact, we allocated approx. 7% of our revenues to R&D from our own resources. With contracted R&D projects, this rate went up to 30% and reached 270 Million US Dollars.

Our most important capital is our highly qualified work force

The number of employees in ASELSAN family, one which is cited as a model in many fields due to its institutionalized approaches, has reached 4050, with a total of 2340 engineers. A glance at the academic level reveals that we have 1350 employees with master’s or PhD degrees. We allocated 4 Million US Dollars to training our staff in 2011; a total of 105,000 hours of training took place in both domestic and international scenes.

Creating an ecosystem within our defense industry

ASELSAN considers SMEs and suppliers as business partners. We share our wealth of know-how, engineering infrastructure and some investments with these companies on a need basis, and thereby try to increase productivity and decrease product development costs.

In 2011, a total of 338 domestic subcontractors including 267 SMEs were paid 183 Million US Dollars in return for work. This amount is about 20% of ASELSAN’ s revenues. The total orders put in to SMEs and subcontractors surpassed 730 Million US Dollars.

Cooperation with universities

Universities are the most important partners of defense industry organizations, where the most important capital is a highly qualified workforce. In addition to providing trained manpower and educational opportunities, universities are increasingly contributing to technology development activities in the industry. Within the past five years, we have collaborated with over 20 universities in more than 150 projects.


Cengiz eRGeNeMANCEO

“270 Million USD allocated to R&D projects”


Message from the CEO

“As a strategy, we attach great importance to globalization and export sales. Therefore, we are open to acquisitions, partnerships and strategic cooperation opportunities that will strengthen our presence as a brand.”

We grant scholarships for PhD level work. Our main goal in doing so is to encourage academic careers in areas needed by the industry.

Effectiveness and productivity in operations

We conduct our work plan based on 10-year forecast, 5-year strategic plan and 3-year detailed plan. In this context, we operate efficiently with the freedom afforded to our divisions in accordance with the principles identified by upper management. We utilize methods such as experimentation with new ideas and approaches, the simplification of procedural steps and the examination of applications in different sectors to increase our productivity in the operational flow.

While carrying out development work, we also aim for the products and systems we offer to be more cost effective than those of our international competitors in particular. As a reflection of this view, our revenues increased by 260% and staff size increased by 30% within a five year period.

A year of Major Projects

For ASELSAN, 2011 was a year in which many big projects went into effect. Three of the first ten contracts composing our backlog were signed in 2011. These projects in order of size were; the Low Altitude Air Defense System Project, the Medium Altitude Air Defense Systems Project, and the Gendarmerie Integrated Communications and Information System (JEMUS) 5th Phase Project.

36 years of ASELSAN

ASELSAN is a growing technology company. In fact, an evaluation identified us as the fastest growing company in Turkey in the field of technology. Within our growth strategy, we attach great importance to the concepts of globalization and increasing exports.

Among our internationalization strategies, we prioritize acquisitions, partnerships and strategic cooperation opportunities that will strengthen our presence as a brand. In this context, we are making a great effort to ensure the success of our partnerships with

Kazakhstan and the UAE, and the creation of new opportunities through them. Another major item on our agenda for the near future is to increase the extent to which our technologies are utilized in civilian fields.

Our ultimate goal is to improve our current standing in the world-scale in the field of defense electronics, which is a result of the importance we attach to human resources and technological accumulation.

Respectfully yours,

Cengiz eRGeNeMAN CEO


Head of the Excecutive Board:

(01) Cengiz eRGeNeMANCEO

Members of the Excecutive Board

(02) Fuat AKÇAYÖZ Vice President (Defense Systems Technologies Division)

(03) ergun BoRAVice President (Radar, Electronic Warfare and Intelligence Systems Division)

(04) Özcan KAHRAMANGilVice President (Microelectronics, Guidance & Electro-Optics Division)

(05) Faik eKeNVice President (Communication and Information Technologies Division)

(06) Ahmet DeMiRVice President / CFO

(07) Mustafa eRTÜRKMarketing Director

(08) Afşin AKKeRMANProcurement Director

(09) Baki şeNSoY Strategy Management Director

(10) Nihat IRKÖRÜCÜHuman Resources and Support Services Director

Executive Board

(02)(04)(06)(08)(10) (01) (03) (05) (07) (09)


2011 Activities

ASELSAN Facilities in KazakhstanUpon a request from President GÜL and Kazakhstan President Nursultan NAZARBAYEV, ASELSAN and Kazakhstan Engineering signed an agreement regarding the establishment of the joint company Kazakhstan- ASELSAN Engineering (KAE). KAE will manufacture night vision systems and electro-optic equipment in the factory to be founded in Astana. In the coming years, ASELSAN aims to diversify and increase its investments in this region.

ASELSAN in the Gulf Region

A joint venture company called IGG ASELSAN INTEGRATED SYSTEMS was founded by ASELSAN and the International Golden Group (IGG) company located in the United Arab Emirates. The joint venture company, which is located in the Abu Dhabi Musaffah Industrial Zone, will carry out marketing, production and after-sales support activities related to remote control weapon systems in the United Arab Emirates. The aim is to expand the scope of activities to cover other countries in the Gulf region in the coming years. Project related activities are currently underway within the context of the contract signed in 2009 for the STAMP and STOP Stabilized Weapon Systems, which ASELSAN will integrate onto a variety of naval platforms used by the United Arab Emirates Naval Forces and Critical National Infrastructure Authority (CNIA).

President Gül Visits ASELSAN FacilitiesPresident GÜL was welcomed by the National Defense Minister, Vecdi GÖNÜL upon his arrival to ASELSAN. President GÜL inspected ASELSAN; where he revealed his pride in what he explored during his visit, declaring: “This is how we wish to see Turkey, a country that takes its place in the international arena with the high technology it transfers to other countries, technology which belongs to her.”

The President continued his speech with the following words: “I am glad to hear that the very high quality and sophisticated products and systems designed by ASELSAN are produced by many subcontractors, the small and medium sized enterprises, across the country, thus fulfill our own and other countries’ needs.”

Highlights in 2011

21At A glAnce MAnAgeMent 2011 Activities SuStAinAbility FinAnciAlS

In the League of GiantsThe US based military publication Defense News publishes the most prestigious yearly ranking of the world’s top 100 defense industry companies (Defense News Top 100). ASELSAN has been included in this list for five consecutive years, consistently moving up in the rankings; 93rd in 2009, 86th in 2010 and 80th in 2011. ASELSAN plans to become one of the world’s top fifty defense industry companies in the near future.

UN Communicates through ASELSAN

The ASELSAN VHF/FM tactical communication and digital intercommunication systems were the product of choice for the Uruguayan Armed Forces Troops in Haiti and Congo serving under the United Nations Peace Force. ASELSAN has received the third order within the scope of the cooperation initiated in 2006 with the Uruguayan Armed Forces. ASELSAN, as a result of the ongoing negotiations with the Uruguayan Ministry of Defense and Armed Forces, plans to increase its activities in the country to encompass Air Defense, Coast Guard, and Electro-Optics systems.

Sub-Contractor Excellence AwardWith the contract signed with RAYTHEON, ASELSAN has undertaken the final integration and testing of the Antenna Mast Group (AMG) system, which is one of the main components of the PATRIOT Long Range Air and Missile Defense System currently being produced for the United Arab Emirates. ASELSAN has become Raytheon’s first international business partner within the scope of the joint development of the PATRIOT system main component and final product integration with this business partnership.

ASELSAN Motorway Toll Collection Systems Exported to Poland

Within the scope of the contract signed in 2011 ASELSAN will design, produce and deliver an operator-led and automatic toll collection system and has received its first order comprising 51 operator-led and automatic toll booths. The export of a similar system had previously taken place to Oman. ASELSAN is also continuing its work on the General Directorate of Highways Motorway and Bosporus Bridges toll collection booths.


2011 Activities

software Defined networking Radio (sDnR)

ASELSAN Software Defined Networking Radios, which are also being used by the allied countries’ armed forces, are developed to enable multi-band, multipurpose utilization in both strategic and tactical fields.

soldier Radio

ASELSAN Soldier Radio provides voice and data communication capability to the soldier in the field, ensuring connectivity with the other members of the squad or the team. ASELSAN Soldier Radio is a small, lightweight and robust radio providing full-duplex communications.

Military Communication Systemscommunication is one of the core business activities of ASeLSAn since its establishment which provides us with the necessary background to realize the design, production and delivery of the next generation communication systems.


tactical Field communication system (tAsMus)

TASMUS is a tactical area communications system which provides network centric communication infrastructure. The main function of TASMUS is to provide a common picture of the battlefield in near-real time and to share data among battlefield systems.


2011 Activities

Public Safety and Emergency Communication SystemsASeLSAn integrated systems in this field are designed to meet the needs of digital radio communication of different user groups in disaster and emergency conditions, as well as in their daily duties.

gendarmerie integrated communication and intelligence systems (JeMus)

JEMUS, is the only communication infrastructure of Turkey providing turnkey solution for secure and safe communication network of gendarmerie.

coast guard integrated communication and intelligence systems (sAHMus)

System is able to meet the communication traffic needs generated by Coast Guard Security Radio users and fully cover the territory in coastal areas.


Professional Radios

ASELSAN Professional Radio Family is designed to fulfill the communication needs of public safety and professional radio users that enables encrypted calls.


2011 Activities

Satellite, Avionics and Naval Communication SystemsASeLSAn provide complete internal / external communication system solutions for all tactical and administrative communication needs, tailored to any platform.

gOKtuRK surveillance and Reconnaissance satellite

ASELSAN is nominated as local responsible party in technology areas covering Ground Station, Satellite Communication Subsystem and Electro-optical Payload Subsystem in the GOKTURK Surveillance and Reconnaissance Satellite project.

naval communication systems

The acceptance tests for MILGEM Corvette-1 Project, Torpedo Boat Project, Landing Craft Tank Project, Yavuz Class Frigate Project and for third, fourth and fifth ship of New Type Patrol Boat Project were successfully completed in 2011.


2011 Activities

Radar Systems With increasing investment in radar technology, ASeLSAn expanded its range of radar products in order to serve both military and professional users.

synthetic Aperture Radar (sAR)

The Synthetic Aperture Radar (SAR) is capable of carrying out operation under all weather conditions. This enables radar imaging and moving target detection even in cloudy and rainy weather during day and night.

surveillance Radars

ALPER (ASELSAN Low Power ECCM Radar) is a low probability of intercept (LPI) navigation radar for detecting surface targets in all weather conditions, day and night. ALPER can be integrated on various naval platforms for navigation.


AselsAn Air Defense Radar (KAlKAn )

KALKAN is a 3-D search and track radar for fast and accurate detection. KALKAN monitors/classifies low altitude and medium altitude air targets as friend or foe.


2011 Activities

Electronic Warfare SystemsASeLSAn has been developing electronic Warfare Self Protection Systems, electronic Support & Attack Systems and their sub-systems indigenously according to customer requirements.

electronic support & electronic Attack systems

In the field of Electronic Support & Electronic Attack Systems, ASELSAN carries out system development, qualification, production and platform integration activities to defend air, land and naval platforms from missile threats.

Microwave Modules Production

ASELSAN, with her new Radar and Electronic Warfare Systems Facilities in Gölbaşı, will become one of the three major microwave module producers in Europe by increasing its module production site.


electronic Warfare self Protection system

ASELSAN develops Integrated Self Protection System for fixed and rotary wing aircrafts. System provides situational awareness and threat specific countermeasures during mission with; Radar Warning, RF Jamming, Missile Warning, Chaff/Flare Dispensing, Laser Warning, IR Countermeasure integration capabilities.


2011 Activities

Electro-Optic SystemsASeLSAn produces Third Generation night Vision equipment, Laser Range Finder and Designator, as well as thermal imagers both for land based, naval and airborne platforms.

Main battle tank and Armored vehicle systems

ASELSAN has pursued the development and integration activities of Tank Fire Control System, Electrical Gun and Turret Drive system, Tank Command Control Combat and Information System, Tank Driver’s Sighting System, Tank Laser Warning System and Remote Control Weapon Station in the scope of Turkish Tank Production Project (ALTAY).


thermal Reconnaissance, surveillance and Designation systems

For modern infantry requirements, ASELSAN provides a wide spectrum line of products as; SCOUT Hand-Held Electro-Optical Sensor System, ASIR Thermal Camera, VIPER Laser Target Designator, Python/Boa Thermal Weapon Sights and Night Vision Goggles.


2011 Activities

Avionic SystemsASeLSAn offers superior capabilities to its customers by providing a variety of navigation and avionics systems. With its accumulated experience and technological know-how, ASeLSAn is capable to design, develop and produce avionic systems.

Multi Functional Display unit

For the Basic Trainer Aircraft Program of the Undersecretariat for Defense Industries, Inertial Navigation Systems and Multi-Functional Display Systems were delivered to main contractor.

Avcı

Helmet Integrated Cueing System for the needs of Turkish Land Forces, Safety of Flight Tests of AVCI-1 System have been completed and the flight with AH-1S Helicopter has been processed.


2011 Activities

Naval System SolutionsASeLSAn develops Integrated naval Systems, particularly combat systems and offer the utmost technical and logistical performance for surface and underwater platforms.

underwater Acoustic systems

In the field of Underwater Acoustic and Sonar Systems, research development activities are initiated to design and produce high-tech sonar and torpedo counter measure systems.

submarine Defense Rocket Firing system

Submarine Defense Rocket Firing Systems produced by ASELSAN are installed to the “New Type Patrol Boat” of the Turkish Navy following the successful accomplishment of the factory acceptance tests.


naval combat systems

ASELSAN as the main contractor of MİLGEM National Vessel Naval Combat System Integration Program is responsible for the development and integration of Weapon Systems, Electronic Warfare (EW) Systems, Self Protection (EW, Acoustic, Infrared), Radars, Electro-Optics (E/O) Systems, Integrated Communications Systems.


2011 Activities

Air Defense Weapon System SolutionsASeLSAn designs and manufactures different caliber guns, missiles and/or rockets platforms for land, naval or airborne vehicles in accordance with the requirements of the customers.


2011 Activities

C4ISR Systemscommand, control, communications, computers, Intelligence, Surveillance, and Reconnaissance (c4ISR) systems are one of the core business and technology areas of ASeLSAn. Our c4ISR product range can be easily tailored to meet specific customer requirements.


2011 Activities

Weapon SystemsASeLSAn places special emphasis on production and development of Weapon Systems. These indigenous systems have been created and shaped according to the defense requirements on aerial, coastal, naval, and border defense platforms.

stabilized Advanced Remote Weapon Platform (sARP)

SARP, ASELSAN’ s remotely operated stabilized weapon platform, combines high-precision reconnaissance capabilities with excellent firepower to serve tactical needs of the battlefield and protect critical infrastructures.

clAW (PenÇe)

Co-development of the 25/30mm unmanned turret continued and reached to integration phase by 2011.


stabilized gun Platforms (stAMP & stOP)

Remote Controlled Stabilized Naval Gun Systems are new generation, cost-effective, medium caliber weapon systems for naval platforms. The system provides lightweight, versatile and effective means of force protection for applications ranging from capital ships to fast patrol boats.


2011 Activities

Unmanned SystemsASeLSAn develops new-generation, autonomous, inter-operable, genuine unmanned systems that are capable of working under adverse weather and terrain conditions of the battlefield.

Denizci

Denizci is a 7m class high speed multi-mission Unmanned Surface Vehicle that can be configured to conduct, reconnaissance, surveillance and target acquisition activities. Denizci also provides defense and deterrence with its remote controlled weapon platform.

ARi

ARI Rotary Wing Unmanned Airborne System with Vertical Take-off/Landing (VTOL) capability provides advanced features by performing fully autonomous flight and real time day/night imaging for the user in military and homeland security missions.


KAPlAn

Kaplan is the new generation multi-purpose UGV based on a rugged high-mobility tracked vehicle platform with a modular operator control unit providing seamless interoperability and a variety of payload kits.

Mius

Mini Fixed Wing Unmanned Aerial System (MIUS), is a lightweight, compact and highly agile solution designed for rapid deployment. Indigenous designed autopilot and gyro stabilized mini gimbal provides fully autonomous missions with real time day/night imaging for surveillance and reconnaissance.


2011 Activities

Fire Support SystemsASeLSAn Fire Support System, AFSAS, is a combination of subsystems for tactical and technical fire direction that covers the entire fire support functionality, ranging from the uppermost command centers at the corps level to the lowermost individual units, at gun and forward observer levels.


2011 Activities

Homeland Security SystemsASeLSAn provides various system solutions to establish a unified homeland security structure with state-of-the-art products and systems.


Traffic and Toll Collection SystemASeLSAn carries on its activities in the development of software and hardware related to traffic management and toll collection.


SustainabilityASeLSAn, a believer in professionalism, is working hard to add value to its empoyees and the environment. It is believed that this value will be sustainable through ASeLSAn’s building blocks, which are;

• Strategy Management• Innovation and Technology Management • Human Resources Management • Quality Management

• Risk Management• Productivity• Occupational Health and Safety• Environment

51At A glAnce MAnAgeMent 2011 Activities SuStainability FinAnciAls

Strategy ManagementInnovative strategies based on state-of-the-art technologies

ASELSAN continues to manufacture technology ASELSAN’s vision is to be among the top fifty defense companies in the world. Within this context, 10 year perspective plans, five year strategic goals and the three year budgetary plans are all determined in every fiscal year. In accordance, Divisions carry out their respective operations with highly qualified human resources, matured processes, abundant resources allocated to R&D activities.


Innovation and Technology Management ASeLSAn’s staff share a passion for always finding or creating the best

A leading company that guides technology Activities in ASELSAN are carried out within a corporate culture that encourages investigation. The management of this accumulation know-how is one of ASELSAN’s strengths.

The ASELSAN Technology Supreme Council, which has been operating at company level, has achieved great success in building the technology infrastructure, making projections regarding critical fields of technology and preparing a technology target plan.

In accordance, it is the duty of the Divisions to develop technologies required in the fields of projected activities and lay the basis for the technologies to be used in next generation products.


Human Resources ManagementGreat success through highly qualified staff

Our most important capital is our staffASELSAN’ s human resources policy is to strengthen the ASELSAN family with the employment of successful and dynamic talents in line with the company vision. In order to assess, appreciate and award our employees’ great success, we put into practice a performance management system evaluating in 360 degrees where goals evaluated on an individual and team basis as well. Within this context we; • Employ a transparent and open management policy, • Ensure employee engagement and loyalty, • Create loyal and happy employees, • Provide the most suitable training and self-improvement opportunities, • Maximize employee productivity, • Ensure equal opportunity among employees, • Enrich payment policies through generous benefits, • Encourage success and creativity.


Quality ManagementA production approach prioritizing quality and durability

AQAP-160 AQAP-2110

ISO 17025

AS 9100 (B,C)

ISO 14001 OHSAS 18001

CMMI 3

Capability Maturity Model Integration


Risk ManagementRational and proactive risk management accurately reading the risk map of the global economy

ASELSAN’ s risk management policy is to develop and implement active methods and systems that foresee the potential risks it may face.

Within this context, risk management efforts in the fields of Finance, Projects, Health and Safety in the Workplace and Environment are of utmost importance. In accordance, Risk Based Process Auditing approach is implemented in internal auditing related activities.

In the creation of the company’s financial risk management model, the “Active- Passive Management (APM) Model” was used as a basis, and foreign exchange, interest and liquidity risks were identified as financial risks.


ProductivityAt ASeLSAn, constantly increasing productivity is seen as a crucial part of a powerful global company.

ASELSAN deems productivity as a fundamental principle. ASELSAN manages all functions through a Corporate Resource Planning System using a holistic structure. Thus, operations are run effectively in the management system based on reliable data.

The CMMI (Capability Maturity Model Integration) is known and respected around the world as one of which requires a mature process management structure. CMMI level 3 were documented for the Microelectronic Guidance and Electro-Optic Division (MGEO). The other divisions are currently in the process of obtaining this certification.

A leading company regarding productivity as a way of life


Occupational Health and SafetyA better workplace is our priority

ASELSAN highly prioritizes the health and safety of its employees as a core principle.

Workplace Health and Safety Practices

• Workplace Health and Safety Committee meetings• Emergency Drills• Employee Training Sessions• Surrounding/Exposure Measurements• Periodical Health Check-ups• Periodical Inspections• Periodical Checks• Workplace Accident Statistics


EnvironmentRespect for the environment during production.

ASELSAN operates responsibly for its environment by preventing damages caused by industrialization. All national and international laws related to energy management, noise and air pollution, raw material selection and waste management are strictly abided by ASELSAN. At ASELSAN, environmental aspects (emissions, waste water) are constantly monitored under an effective waste management system. ASELSAN greenhouse gas emissions are regularly calculated and monitored with reference to TS ISO 14064 and the Green House Protocol.

ASELSAN has been certified for the ISO 14001 Environmental Management System and the OHSAS 18001 Workplace Health and Safety Integrated Management System. With these certifications, the Environment and Workplace Health related practices at ASELSAN are conducted systematically.

59At A glAnce MAnAgeMent 2011 Activities sustAinAbility FINANCIALS

ASELSANASELSANASELSANASELSAN ELEKTRONİK SANAYİ VE TİCARET AELEKTRONİK SANAYİ VE TİCARET AELEKTRONİK SANAYİ VE TİCARET AELEKTRONİK SANAYİ VE TİCARET A....Ş.Ş.Ş.Ş. Mehmet Akif Ersoy Mahallesi 296. Cadde No:16 06370 Yenimahalle / Ankara

2011201120112011 FinanFinanFinanFinancial Informationcial Informationcial Informationcial Information

In CompliaIn CompliaIn CompliaIn Compliance with Internationce with Internationce with Internationce with International Financial Reporting Standardnal Financial Reporting Standardnal Financial Reporting Standardnal Financial Reporting Standards (IFRS)s (IFRS)s (IFRS)s (IFRS)

Consolidated Balance Sheet Consolidated Income Statement Consolidated Statement of Changes In Equity Consolidated Statement of Cash Flow Notes for Consolidated Financial Statements Independent Auditor's Report Annual Report of the Board of Directors

Board of Auditor’s ReportBoard of Auditor’s ReportBoard of Auditor’s ReportBoard of Auditor’s Report Proposal for Profit DistributionProposal for Profit DistributionProposal for Profit DistributionProposal for Profit Distribution

60 ASELSAN 2011 ANNUAL REPORTFINANCIAL INFORMATION

ASELSAN A.Ş.AND ITS SUBSIDIARIESASELSAN A.Ş.AND ITS SUBSIDIARIESASELSAN A.Ş.AND ITS SUBSIDIARIESASELSAN A.Ş.AND ITS SUBSIDIARIES

AUDITED CONSOLIDATED BALANCE SHEET AS OF 31 DECEMBER 2011(Amounts are expressed in Turkish Lira (TL) unless otherwise stated.)

CURRENT ASSETSCURRENT ASSETSCURRENT ASSETSCURRENT ASSETS 1.387.664.3471.387.664.3471.387.664.3471.387.664.347 1.463.321.4521.463.321.4521.463.321.4521.463.321.452 1.522.937.9161.522.937.9161.522.937.9161.522.937.916

Cash and cash equivalents 4 179.460.161 600.696.797 642.040.945

Financial assets 5 2.267.100 5.927.597 5.950.552

Trade receivables 7 275.148.250 125.432.360 123.170.912

Other receivables 8 19.674.394 9.193.047 12.335.427

Inventories 9 551.915.159 472.487.877 522.493.441

Order advances given 17 229.778.048 153.851.940 125.261.624

Other current assets 18 129.420.843 95.731.443 91.684.625

Assets classified as held for sale 26 392 391 390

NON-CURRENT ASSETSNON-CURRENT ASSETSNON-CURRENT ASSETSNON-CURRENT ASSETS 1.004.379.9001.004.379.9001.004.379.9001.004.379.900 809.483.321809.483.321809.483.321809.483.321 648.031.251648.031.251648.031.251648.031.251

Long term trade receivables 7 186.339.307 167.392.514 152.698.734

Other long term receivables 8 108.542 68.316 124.128

Long term financial assets 5 9.484.215 10.003.355 9.963.235

Fixed assets 11 350.345.056 271.864.353 230.634.396

Intangible assets 12 172.200.257 112.802.654 84.120.454

Order advances given 17 183.468.477 180.470.670 137.707.633

Deferred tax assets 27 91.928.877 54.573.131 26.629.914

Other non-current assets 18 10.505.169 12.308.328 6.152.757

TOTAL ASSETSTOTAL ASSETSTOTAL ASSETSTOTAL ASSETS 2.392.044.2472.392.044.2472.392.044.2472.392.044.247 2.272.804.7732.272.804.7732.272.804.7732.272.804.773 2.170.969.1672.170.969.1672.170.969.1672.170.969.167

NoteNoteNoteNote

(Audited) Current Period(Audited) Current Period(Audited) Current Period(Audited) Current Period

31 December 201131 December 201131 December 201131 December 2011

(Audited) Prior Period(Audited) Prior Period(Audited) Prior Period(Audited) Prior Period

(Restated) (Restated) (Restated) (Restated)



(Restated)(Restated)(Restated)(Restated)

1 January 20101 January 20101 January 20101 January 2010

ASSETSASSETSASSETSASSETS



AUDITED CONSOLIDATED BALANCE SHEET AS OF 31 DECEMBER 2011(Amounts are expressed in Turkish Lira (TL) unless otherwise stated.)

CURRENT LIABILITIESCURRENT LIABILITIESCURRENT LIABILITIESCURRENT LIABILITIES 426.813.385426.813.385426.813.385426.813.385 481.298.949481.298.949481.298.949481.298.949 716.102.034716.102.034716.102.034716.102.034

Financial liabilities 6 15.090.003 104.040.496 370.019.636

Trade payables 7 161.381.235 134.961.789 115.287.805

Other payables 8 23.354.593 10.727.705 10.925.705

Government grants 13 6.162.438 3.093.356 2.164.680

Corporate tax liability 27 107.422 - -

Expense accruals 14 76.612.776 46.083.517 44.633.800

Provisions for employee benefits 16 13.993.659 9.459.381 7.605.642

Order advances received 17 125.804.222 172.280.814 164.786.036

Other current liabilities 18 4.307.037 651.891 678.730

NON-CURRENT LIABILITIESNON-CURRENT LIABILITIESNON-CURRENT LIABILITIESNON-CURRENT LIABILITIES 946.414.472946.414.472946.414.472946.414.472 906.228.670906.228.670906.228.670906.228.670 739.163.877739.163.877739.163.877739.163.877

Long-term financial liabilities 6 124.627.727 39.860.947 39.668.729

Long-term trade payables 7 32.653.975 34.888.310 26.640.682

Other long term trade payables 8 82.297 5.000 -

Expense accruals 14 11.128.448 9.044.100 3.083.372

Provisions for employee benefits 16 73.537.472 63.377.093 52.267.100

Order advances received 17 704.377.488 759.053.220 617.503.994

Other non-current liabilities 18 7.065 - -

EQUITYEQUITYEQUITYEQUITY 1.018.816.3901.018.816.3901.018.816.3901.018.816.390 885.277.154885.277.154885.277.154885.277.154 715.703.256715.703.256715.703.256715.703.256

Equity attributable to equity holders of the parentEquity attributable to equity holders of the parentEquity attributable to equity holders of the parentEquity attributable to equity holders of the parent 1.018.805.4701.018.805.4701.018.805.4701.018.805.470 885.045.418885.045.418885.045.418885.045.418 715.761.499715.761.499715.761.499715.761.499

Share capital 19 235.224.000 235.224.000 117.612.000

Share capital adjustment 19 132.773.042 132.773.042 132.773.042

Restricted profit reserves 19 42.731.216 29.813.447 20.173.095

Retained earnings 447.322.067 260.354.440 259.838.367

Net profit for the period 160.755.145 226.880.489 185.364.995

Non-controlling interestsNon-controlling interestsNon-controlling interestsNon-controlling interests 10.92010.92010.92010.920 231.736231.736231.736231.736 (58.243)(58.243)(58.243)(58.243)

TOTAL LIABILITIES AND EQUITYTOTAL LIABILITIES AND EQUITYTOTAL LIABILITIES AND EQUITYTOTAL LIABILITIES AND EQUITY 2.392.044.2472.392.044.2472.392.044.2472.392.044.247 2.272.804.7732.272.804.7732.272.804.7732.272.804.773 2.170.969.1672.170.969.1672.170.969.1672.170.969.167

NoteNoteNoteNote

(Audited) Current Period(Audited) Current Period(Audited) Current Period(Audited) Current Period



(Restated) (Restated) (Restated) (Restated)




1 January 20101 January 20101 January 20101 January 2010

LIABILITIESLIABILITIESLIABILITIESLIABILITIES



AUDITED CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2011 (Amounts are expressed in Turkish Lira (TL) unless otherwise stated.)

OPERATING INCOMEOPERATING INCOMEOPERATING INCOMEOPERATING INCOME

Sales revenue 20 1.501.878.990 1.212.398.793

Cost of sales (-) 20 (1.105.775.054) (904.840.578)

GROSS PROFITGROSS PROFITGROSS PROFITGROSS PROFIT 396.103.936396.103.936396.103.936396.103.936 307.558.215307.558.215307.558.215307.558.215

Marketing, selling and distribution expenses (-) 21 (31.616.522) (23.556.254)

General administrative expenses (-) 21 (83.804.962) (72.124.806)

Research and development expenses (-) 21 (48.925.095) (33.132.162)

Other operating income 23 4.216.949 5.498.071

Other operating expenses (-) 23 (1.598.532) (1.674.956)

OPERATING PROFITOPERATING PROFITOPERATING PROFITOPERATING PROFIT 234.375.774234.375.774234.375.774234.375.774 182.568.108182.568.108182.568.108182.568.108

Non-operating financial income 24 362.037.662 283.903.077

Non-operating financial expenses (-) 25 (472.447.199) (267.746.447)

PROFIT BEFORE TAXATIONPROFIT BEFORE TAXATIONPROFIT BEFORE TAXATIONPROFIT BEFORE TAXATION 123.966.237123.966.237123.966.237123.966.237 198.724.738198.724.738198.724.738198.724.738

Tax IncomeTax IncomeTax IncomeTax Income 36.436.80836.436.80836.436.80836.436.808 27.943.21727.943.21727.943.21727.943.217

- Current corporate tax expense 27 (917.110) -

- Deferred tax income 27 37.353.918 27.943.217

PROFIT FOR THE PERIODPROFIT FOR THE PERIODPROFIT FOR THE PERIODPROFIT FOR THE PERIOD 160.403.045160.403.045160.403.045160.403.045 226.667.955226.667.955226.667.955226.667.955

Distribution of profit for the periodDistribution of profit for the periodDistribution of profit for the periodDistribution of profit for the period

Non-controlling interest (352.100) (212.534)

Parent company 160.755.145 226.880.489

Earnings per 100 sharesEarnings per 100 sharesEarnings per 100 sharesEarnings per 100 shares 28282828 0,680,680,680,68 0,960,960,960,96

PROFIT FOR THE PERIOD PROFIT FOR THE PERIOD PROFIT FOR THE PERIOD PROFIT FOR THE PERIOD 160.403.045 226.667.955

OTHER COMPREHENSIVE INCOMEOTHER COMPREHENSIVE INCOMEOTHER COMPREHENSIVE INCOMEOTHER COMPREHENSIVE INCOME - - - - - - - -

TOTAL COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME 160.403.045 226.667.955

Distribution of total comprehensive incomeDistribution of total comprehensive incomeDistribution of total comprehensive incomeDistribution of total comprehensive income

Parent company 160.755.145 226.880.489

Non-controlling interest (352.100) (212.534)

NoteNoteNoteNote

(Audited)(Audited)(Audited)(Audited)

Current PeriodCurrent PeriodCurrent PeriodCurrent Period

1 January-1 January-1 January-1 January-


(Audited)(Audited)(Audited)(Audited)

Prior Period (Restated)Prior Period (Restated)Prior Period (Restated)Prior Period (Restated)




AS

EL

SA

N A

.Ş.A

ND

IT

S S

UB

SID

IAR

IES

AS

EL

SA

N A

.Ş.A

ND

IT

S S

UB

SID

IAR

IES

AS

EL

SA

N A

.Ş.A

ND

IT

S S

UB

SID

IAR

IES

AS

EL

SA

N A

.Ş.A

ND

IT

S S

UB

SID

IAR

IES

AU

DIT

ED

CO

NS

OL

IDA

TE

D S

TA

TE

ME

NT

OF

CH

AN

GE

S I

N E

QU

ITY

FO

R T

HE

YE

AR

EN

DE

D 3

1 D

EC

EM

BE

R 2

011

(Am

ou

nts

are

ex

pre

ss

ed

in

Tu

rkis

h L

ira

(T

L)

un

les

s o

the

rwis

e s

tate

d.)

Sh

are

ca

pit

al

Sh

are

ca

pit

al

Sh

are

ca

pit

al

Sh

are

ca

pit

al

Sh

are

ca

pit

al

Sh

are

ca

pit

al

Sh

are

ca

pit

al

Sh

are

ca

pit

al

ad

jus

tme

nts

a

dju

stm

en

ts

ad

jus

tme

nts

a

dju

stm

en

ts

Re

str

icte

d

Re

str

icte

d

Re

str

icte

d

Re

str

icte

d

pro

fit

res

erv

es

pro

fit

res

erv

es

pro

fit

res

erv

es

pro

fit

res

erv

es

Re

tain

ed

R

eta

ine

d

Re

tain

ed

R

eta

ine

d

ea

rnin

gs

ea

rnin

gs

ea

rnin

gs

ea

rnin

gs

Pro

fit

for

the

P

rofi

t fo

r th

e

Pro

fit

for

the

P

rofi

t fo

r th

e

pe

rio

dp

eri

od

pe

rio

dp

eri

od

Oth

er

Oth

er

Oth

er

Oth

er

fun

ds

fun

ds

fun

ds

fun

ds

Eq

uit

y

Eq

uit

y

Eq

uit

y

Eq

uit

y

Att

rib

uta

ble

Att

rib

uta

ble

Att

rib

uta

ble

Att

rib

uta

ble

to P

are

nt

to P

are

nt

to P

are

nt

to P

are

nt

co

mp

an

yc

om

pa

ny

co

mp

an

yc

om

pa

ny

No

n-c

on

tro

llin

g

No

n-c

on

tro

llin

g

No

n-c

on

tro

llin

g

No

n-c

on

tro

llin

g

inte

res

tin

tere

st

inte

res

tin

tere

st

To

tal

To

tal

To

tal

To

tal

Ba

lan

ce

as

of

1 J

an

ua

ry 2

010

(p

rev

iou

sly

B

ala

nc

e a

s o

f 1

Ja

nu

ary

20

10 (

pre

vio

us

ly

Ba

lan

ce

as

of

1 J

an

ua

ry 2

010

(p

rev

iou

sly

B

ala

nc

e a

s o

f 1

Ja

nu

ary

20

10 (

pre

vio

us

ly

rep

ort

ed

)re

po

rte

d)

rep

ort

ed

)re

po

rte

d)

117

.612

.00

0

117

.612

.00

0

117

.612

.00

0

117

.612

.00

0

132

.77

3.0

42

132

.77

3.0

42

132

.77

3.0

42

132

.77

3.0

42

20

.17

3.0

95

2

0.1

73

.09

5

20

.17

3.0

95

2

0.1

73

.09

5

20

4.5

42

.318

2

04

.54

2.3

18

20

4.5

42

.318

2

04

.54

2.3

18

185

.36

4.9

95

18

5.3

64

.99

5

185

.36

4.9

95

18

5.3

64

.99

5

88

9.3

50

8

89

.35

0

88

9.3

50

8

89

.35

0

66

1.3

54

.80

0

66

1.3

54

.80

0

66

1.3

54

.80

0

66

1.3

54

.80

0

(1.4

90

.26

4)

(1.4

90

.26

4)

(1.4

90

.26

4)

(1.4

90

.26

4)

65

9.8

64

.53

6

65

9.8

64

.53

6

65

9.8

64

.53

6

65

9.8

64

.53

6

Eff

ec

t o

f re

sta

tem

en

t --

----

55

.29

6.0

49

--(8

89

.35

0)

54

.40

6.6

99

1.

43

2.0

21

55

.83

8.7

20

Ba

lan

ce

as

of

1 J

an

ua

ry 2

010

(re

sta

ted

)B

ala

nc

e a

s o

f 1

Ja

nu

ary

20

10 (

res

tate

d)

Ba

lan

ce

as

of

1 J

an

ua

ry 2

010

(re

sta

ted

)B

ala

nc

e a

s o

f 1

Ja

nu

ary

20

10 (

res

tate

d)

117

.612

.00

011

7.6

12.0

00

117

.612

.00

011

7.6

12.0

00

132

.77

3.0

42

132

.77

3.0

42

132

.77

3.0

42

132

.77

3.0

42

20

.17

3.0

95

20

.17

3.0

95

20

.17

3.0

95

20

.17

3.0

95

25

9.8

38

.36

72

59

.83

8.3

67

25

9.8

38

.36

72

59

.83

8.3

67

185

.36

4.9

95

185

.36

4.9

95

185

.36

4.9

95

185

.36

4.9

95

--7

15.7

61.

49

97

15.7

61.

49

97

15.7

61.

49

97

15.7

61.

49

9(5

8.2

43

)(5

8.2

43

)(5

8.2

43

)(5

8.2

43

)7

15.7

03

.25

67

15.7

03

.25

67

15.7

03

.25

67

15.7

03

.25

6

Inc

rea

se

in

sh

are

ca

pit

al

117

.612

.00

0--

----

(117

.612

.00

0)

---- ------

---- ------

Tra

ns

fers

----

9.6

33

.112

83

3.9

98

(10

.46

7.1

10)

---- ------

---- ------

Pa

ym

en

t o

f d

ivid

en

ds

----

----

(57

.62

9.8

80

)--

(57

.62

9.8

80

)(5

7.6

29

.88

0)

(57

.62

9.8

80

)(5

7.6

29

.88

0)

--(5

7.6

29

.88

0)

(57

.62

9.8

80

)(5

7.6

29

.88

0)

(57

.62

9.8

80

)

To

tal

co

mp

reh

en

siv

e i

nc

om

e--

----

--2

26

.88

0.4

89

--2

26

.88

0.4

89

2

26

.88

0.4

89

2

26

.88

0.4

89

2

26

.88

0.4

89

(2

12.5

34

)2

26

.66

7.9

55

22

6.6

67

.95

52

26

.66

7.9

55

22

6.6

67

.95

5

Th

e e

ffe

ct

of

inc

rea

se

in

sh

are

s o

f th

e

su

bs

idia

rie

s

----

7.2

40

(317

.92

5)

34

3.9

95

--3

3.3

103

3.3

103

3.3

103

3.3

1017

8.4

95

211

.80

52

11.8

05

211

.80

52

11.8

05

Ca

pit

al

inc

rea

se

of

the

su

bs

idia

rie

s--

----

----

---- ------

32

4.0

183

24

.018

32

4.0

183

24

.018

32

4.0

18

Ba

lan

ce

as

of

31

De

ce

mb

er

20

10B

ala

nc

e a

s o

f 3

1 D

ec

em

be

r 2

010

Ba

lan

ce

as

of

31

De

ce

mb

er

20

10B

ala

nc

e a

s o

f 3

1 D

ec

em

be

r 2

010

23

5.2

24

.00

02

35

.22

4.0

00

23

5.2

24

.00

02

35

.22

4.0

00

132

.77

3.0

42

132

.77

3.0

42

132

.77

3.0

42

132

.77

3.0

42

29

.813

.44

72

9.8

13.4

47

29

.813

.44

72

9.8

13.4

47

26

0.3

54

.44

02

60

.35

4.4

40

26

0.3

54

.44

02

60

.35

4.4

40

22

6.8

80

.48

92

26

.88

0.4

89

22

6.8

80

.48

92

26

.88

0.4

89

-- ------8

85

.04

5.4

188

85

.04

5.4

188

85

.04

5.4

188

85

.04

5.4

182

31.

73

62

31.

73

62

31.

73

62

31.

73

68

85

.27

7.1

54

88

5.2

77

.15

48

85

.27

7.1

54

88

5.2

77

.15

4

Th

e e

ffe

ct

of

the

en

titi

es

in

clu

de

d i

n

co

ns

oli

da

tio

n--

--3

00

.85

75

.40

0.1

85

----

5.7

01.

04

2

5.7

01.

04

2

5.7

01.

04

2

5.7

01.

04

2

131.

28

45

.83

2.3

26

5.8

32

.32

65

.83

2.3

26

5.8

32

.32

6

Tra

ns

fers

----

12.6

16.9

1218

1.5

67

.44

2(1

94

.18

4.3

54

)--

-- --------

-- ------

Pa

ym

en

t o

f d

ivid

en

ds

----

----

(32

.69

6.1

35

)--

(32

.69

6.1

35

)(3

2.6

96

.13

5)

(32

.69

6.1

35

)(3

2.6

96

.13

5)

--(3

2.6

96

.13

5)

(32

.69

6.1

35

)(3

2.6

96

.13

5)

(32

.69

6.1

35

)

To

tal

co

mp

reh

en

siv

e i

nc

om

e--

----

--16

0.7

55

.14

5--

160

.75

5.1

45

160

.75

5.1

45

160

.75

5.1

45

160

.75

5.1

45

(35

2.1

00

)16

0.4

03

.04

516

0.4

03

.04

516

0.4

03

.04

516

0.4

03

.04

5

Ba

lan

ce

as

of

31

De

ce

mb

er

20

11B

ala

nc

e a

s o

f 3

1 D

ec

em

be

r 2

011

Ba

lan

ce

as

of

31

De

ce

mb

er

20

11B

ala

nc

e a

s o

f 3

1 D

ec

em

be

r 2

011

23

5.2

24

.00

02

35

.22

4.0

00

23

5.2

24

.00

02

35

.22

4.0

00

132

.77

3.0

42

132

.77

3.0

42

132

.77

3.0

42

132

.77

3.0

42

42

.73

1.2

164

2.7

31.

216

42

.73

1.2

164

2.7

31.

216

44

7.3

22

.06

74

47

.32

2.0

67

44

7.3

22

.06

74

47

.32

2.0

67

160

.75

5.1

45

160

.75

5.1

45

160

.75

5.1

45

160

.75

5.1

45

-- ------1.

018

.80

5.4

70

1.0

18.8

05

.47

01.

018

.80

5.4

70

1.0

18.8

05

.47

010

.92

010

.92

010

.92

010

.92

01.

018

.816

.39

01.

018

.816

.39

01.

018

.816

.39

01.

018

.816

.39

0



(Amounts are expressed in Turkish Lira (TL) unless otherwise stated.)

CASH FLOWS FROM OPERATING ACTIVITIESCASH FLOWS FROM OPERATING ACTIVITIESCASH FLOWS FROM OPERATING ACTIVITIESCASH FLOWS FROM OPERATING ACTIVITIES

Net profit for the period 160.403.045 226.667.955

Adjustments to reconcile net profit for the period to cashAdjustments to reconcile net profit for the period to cashAdjustments to reconcile net profit for the period to cashAdjustments to reconcile net profit for the period to cash

provided by operating activitiesprovided by operating activitiesprovided by operating activitiesprovided by operating activities

Depreciation and amortization 11-12 58.072.210 42.959.797Provision for employee benefits 18.224.374 15.967.636Allowances for doubtful receivables –net 7 226.053 (44.913)Provision for guarantee expenses 14 11.619.350 5.433.317Provision for delay penalties and fines 14 11.836.723 3.154.753Provision for pending claims and lawsuits- net 14 (175.616) 425.231Impairment provision for inventory 9 1.602.054 6.814.224Other provisions 14 9.105.214 (1.602.856)Tax income 27 (36.436.808) (27.943.217)Interest income 24 (17.724.493) (27.264.863)Interest expense 25 1.680.505 9.196.283

Net cash generated by operating activities beforeNet cash generated by operating activities beforeNet cash generated by operating activities beforeNet cash generated by operating activities before

movements in working capitalmovements in working capitalmovements in working capitalmovements in working capital218.432.611218.432.611218.432.611218.432.611 253.763.347253.763.347253.763.347253.763.347

Movements in working capital Trade receivables (158.857.525) (16.910.316)Other receivables (9.266.422) 3.198.192Inventories (75.223.270) 43.191.340Order advances given (68.530.027) (71.353.353)Other current assets (33.689.400) (4.046.818)Other non-current assets 1.803.159 (6.155.571)Trade payables 16.544.750 27.921.612Other payables 11.974.043 (193.000)Government grants 3.069.082 928.676Order advances received (115.168.533) 149.044.004Other liabilities 3.732.788 (26.839)

Net cash (used in)/provided by operationsNet cash (used in)/provided by operationsNet cash (used in)/provided by operationsNet cash (used in)/provided by operations (423.611.355)(423.611.355)(423.611.355)(423.611.355) 125.597.927125.597.927125.597.927125.597.927

Interest received 24 17.724.493 27.264.863Tax paid (967.700) --Interest paid (597.923) (9.122.435)Employee termination benefits paid 16 (4.163.260) (3.003.904)

Cash generated by operating activitiesCash generated by operating activitiesCash generated by operating activitiesCash generated by operating activities 11.995.61011.995.61011.995.61011.995.610 15.138.52415.138.52415.138.52415.138.524

CASH FLOWS FROM INVESTING ACTIVITIESCASH FLOWS FROM INVESTING ACTIVITIESCASH FLOWS FROM INVESTING ACTIVITIESCASH FLOWS FROM INVESTING ACTIVITIES

Payments for fixed assets (114.851.349) (73.302.909)Proceeds from disposal of fixed assets 730.468 959.628Payments for intangible assets (80.498.738) (40.528.673)Change in the financial investments 4.398.387 (17.165)The effect of share increase in subsidiaries -- 245.844Change in the non-controlling interest 131.284 289.979

Net cash used in investing activitiesNet cash used in investing activitiesNet cash used in investing activitiesNet cash used in investing activities (190.089.948)(190.089.948)(190.089.948)(190.089.948) (112.353.296)(112.353.296)(112.353.296)(112.353.296)

CASH FLOWS FROM FINANCING ACTIVITIESCASH FLOWS FROM FINANCING ACTIVITIESCASH FLOWS FROM FINANCING ACTIVITIESCASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings 218.687.010 650.878.741Repayments of borrowings (223.954.429) (916.739.511)Dividends paid (32.696.135) (57.629.880)

Net cash used in financing activitiesNet cash used in financing activitiesNet cash used in financing activitiesNet cash used in financing activities (37.963.554)(37.963.554)(37.963.554)(37.963.554) (323.490.650)(323.490.650)(323.490.650)(323.490.650)

NET CHANGE IN CASH AND CASH EQUIVALENTSNET CHANGE IN CASH AND CASH EQUIVALENTSNET CHANGE IN CASH AND CASH EQUIVALENTSNET CHANGE IN CASH AND CASH EQUIVALENTS (421.236.636)(421.236.636)(421.236.636)(421.236.636) (41.344.148)(41.344.148)(41.344.148)(41.344.148)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OFCASH AND CASH EQUIVALENTS AT THE BEGINNING OFCASH AND CASH EQUIVALENTS AT THE BEGINNING OFCASH AND CASH EQUIVALENTS AT THE BEGINNING OF

THE PERIODTHE PERIODTHE PERIODTHE PERIOD600.696.797600.696.797600.696.797600.696.797 642.040.945642.040.945642.040.945642.040.945

CASH AND CASH EQUIVALENTS AT THE END OFCASH AND CASH EQUIVALENTS AT THE END OFCASH AND CASH EQUIVALENTS AT THE END OFCASH AND CASH EQUIVALENTS AT THE END OF

THE PERIODTHE PERIODTHE PERIODTHE PERIOD4444 179.460.161179.460.161179.460.161179.460.161 600.696.797600.696.797600.696.797600.696.797

NoteNoteNoteNote



31 December 31 December 31 December 31 December

2010201020102010


31 December 31 December 31 December 31 December

2011201120112011

AUDITED CONSOLIDATED STATEMENT OF CASH FLOW FOR THE YEAR ENDED

31 DECEMBER 2011


ASELSAN A.Ş. AND ITS SUBSIDIARIESASELSAN A.Ş. AND ITS SUBSIDIARIESASELSAN A.Ş. AND ITS SUBSIDIARIESASELSAN A.Ş. AND ITS SUBSIDIARIES AUDITED CONSOLIDATED BALANCE SHEET AS OF 31 DECEMBER 2011 (Amounts are expressed in Turkish Lira (TL) unless otherwise stated.)

1.1.1.1. ORGANIZATION AND OPERATIONSORGANIZATION AND OPERATIONSORGANIZATION AND OPERATIONSORGANIZATION AND OPERATIONS OF THE GROUPOF THE GROUPOF THE GROUPOF THE GROUP

Aselsan Elektronik Sanayi ve Ticaret A.Ş. (the Company) was established in order to engage principally in research, development, engineering, production, tests, assembly, integration and sales, after sales support, consultancy and trading activities, to provide and conduct all sorts of activities for project preparation, engineering, consultancy, service providing, training, contracting, construction, publishing, trading, operation and internet services regarding various software, equipment, system, tools, material and platforms in the fields of electrical, electronics, microwave, electro-optics, guidance, computer, data processing, encryption, security, mechanics, chemistry and related subjects within the army, navy, air force and aerospace applications to all institutions, organizations, companies and individual consumers. The Company was established at the end of 1975 as a corporation by Turkish Land Forces Foundation. The Company commenced its production activities in Macunköy facilities in early 1979. The Company has been organized in four main divisions: The Communication and Information Technologies Division (HBT), Radar, Electronic Warfare and Intelligence Systems (REHİS), Defense Systems Technologies (SST) and Microelectronics, Guidance & Electro-Optics Division (MGEO) based on the investment and production requirements of projects carried out. The Company carries out its manufacturing and engineering activities in Macunköy and Akyurt facilities and the Head office is located in Ankara, Macunköy. Turkish Armed Forces Foundation (“TAFF”) is the main shareholder of the Company which holds 84,58% of the capital and maintains control of the Company. TAFF was established in 17 June 1987 within the law number 3388, in order to manufacture or import guns, equipment and appliances needed for Turkish Armed Forces. The Company is registered with Capital Markets Board of Turkey (“CMB”) and its shares are quoted in Istanbul Stock Exchange (“ISE”) since 1990. The free float rate of the Company as of 31 December 2011 is 15,30% (31 December 2010: 15,30%) (Note 19). The Company’s trade registry address is Mehmet Akif Ersoy Mahallesi 296. Cadde No:16 06370 Yenimahalle/Ankara. The Company, and its consolidated subsidiaries Mikrodalga Elektronik Sistemleri A.Ş. (Mikes) and AselsanNet Elekt. ve Hab. Sist. San. Tic. İnş. ve Taah. Ltd. Şti. (AselsanNet), operating in the same sector with the Company, are collectively referred to as the “Group” in the accompanying notes.


The main operations of the companies included in the consolidation and the share percentage of the Group for these companies are as follows:

31 December 2011

31 December 2010

Company name Operation Share (%)

Mikes

Research and development on microwave projects 96,36 96,36

AselsanNet (*) Communication systems 95,00 95,00

(*) Included in the consolidation as of 31 December 2011. The subsidiaries Mikroelektronik Ar-Ge Tasarım ve Ticaret Limited Şirketi ve Aselsan Bakü Şirketi which are classified as non-current financial assets are excluded from consolidation as their inclusion does not materially affect the consolidated financial results of the Group (Note: 5). Besides, the Company opened up a branch as “Aselsan Elektronik Sanayi ve Ticaret A.Ş. EP Co.” in 2011 in South Africa which aims to design optic systems and marketing and selling the Company’s products in South Africa and nearby countries. The number of personnel employed by the Group as of 31 December 2011 is 4.888 (31 December 2010: 4.493). Approval of the consolidated financial statements: The consolidated financial statements are approved by the Board of Directors and have been granted authorization to be published on 8 March 2012 by the decision number 714. Other than the Board of Directors and the General Assembly, no authority has been given for revision of the financial statements.

2.2.2.2. BASIS OF PRESENTATION OF CONSOLIDATED FINANCIALBASIS OF PRESENTATION OF CONSOLIDATED FINANCIALBASIS OF PRESENTATION OF CONSOLIDATED FINANCIALBASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTSSTATEMENTSSTATEMENTSSTATEMENTS

2.1. 2.1. 2.1. 2.1. The Basis of PThe Basis of PThe Basis of PThe Basis of Presentationresentationresentationresentation The basis of preparation of consolidated financial statements and significant accounting policies The company and its subsidiaries registered in Turkey, Mikes and AselsanNet maintain their books of account and prepare their statutory financial statements (“Statutory Financial Statements”) in accordance with accounting principles in the Turkish Commercial Code (“TCC”) and tax legislation in Turkish Lira (“TL”). The accompanying consolidated financial statements are based on the statutory records of the Group with the adjustments and reclassifications in accordance with Generally Accepted Accounting Standards issued by the CMB. CMB has established principles, procedures and basis on the preparation of financial reports by enterprises and the representation of the reports with Communiqué Series XI, No: 29 “Communiqué on Capital Markets Financial Reporting Standards”. This Communiqué is applicable for the first interim


financial statements to be prepared after 1 January 2008 and with this Communiqué, the Communiqué Series XI No: 25 “Communiqué on Capital Markets Accounting Standards” has been repealed. In accordance with this Communiqué, the companies are supposed to prepare their financial statements in accordance with the International Financial Reporting Standards (“IAS/IFRS”) accepted by European Union. Nevertheless, until the discrepancies between the IAS/IFRS accepted by the European Union, and the IAS/IFRS declared by IASB are announced by the Turkish Accounting Standards Board (“TASB”), IAS/IFRS will be in use. Under these circumstances, Turkish Accounting Standards / Turkish Financial reporting Standards (“TAS/TFRS”), which are the standards published by TASB, not contradicting with IAS/IFRS will be adopted. The accompanying consolidated financial statements comply with CMB’s decree announced on 17 April 2008 and 9 January 2009 regarding the format of the financial statements and footnotes. According Statutory Decree No: 660 published on 2 November 2011 in the Official Gazette, the Additional Clause 1 of the Law No: 2499 was cancelled and Public Oversight, Accounting and Auditing Standards Authority (“Institution”) was established. Current arrangements related with this Statutory Decrees, in accordance with the Temporary Law no.1, is continued to be applied until the standards and amendments go in effect. Therefore, the stated situation does not cause any amendment in the “Basis of Presentation of Financial Statements” stated in the notes of financial statements as of balance sheet date. As explained in Note 2.3 and Note 33, since the opening adjustments to restate the prior year financial statements in accordance with IAS 8 are booked as of 1 January 2010, restatement effects on the profit and loss statement for 2009 are presented in the retained earnings as of 1 January 2010. The consolidated financial statements are prepared according to historical cost accounting. In order to determine the historical cost, the fair values paid for assets are considered.

Preparation of financial statements in hyperinflationary periods

CMB, with its resolution dated 17 March 2005 declared that companies operating in Turkey which prepare their financial statements in accordance with CMB Accounting Standards, effective 1 January 2005, will not be subject to the application of inflation accounting. Consequently, in the accompanying financial statements IAS 29 “Financial Reporting in Hyperinflationary Economies” was not applied. Currency in use The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in TL, which is the functional, and presentation currency of the Company and the reporting currency for the consolidated financial statements.


Consolidation principals Subsidiaries: The details of the subsidiaries of the Group are as follows:

Group’s proportion of ownership and voting power

held (%)

Subsidiaries Location

2011

2010

Principal Activity

Mikes Turkey 96,36 96,36 Microwave R&D projects

AselsanNet (*) Turkey 95 95 Telecommunication system

Aselsan Baku (**) Azerbaijan 100 100 Marketing and sales of the

group products

Mikroelektronik Ar-Ge Tasarım ve Ticaret Limited A.Ş.(**) Turkey 85 85

Microelectronic R&D

projects (*) Included in the consolidation as of 31 December 2011. (**)Excluded from group consolidation as it does not significantly affect the consolidated financial results.

The accompanying consolidated financial statements include the financial statements of the Company and entities controlled or jointly controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed in the current year are included in the consolidated comprehensive income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Total comprehensive income is distributed over parent company share and non-controlling interests although the total non-controlling interest turns into a negative balance. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. Interests in joint ventures: A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control that is when the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control. The details of the Group’s interests in joint ventures as of 31 December 2011 and 2010 are as follows:


Group’s proportion of

ownership and voting power

held (%)

Country of incorporation and operation

Joint Ventures and its related parties

2011 2010

Principal Activity

IGG Aselsan Integrated Systems LLC U.A.E.

49 -

Marketing and sales of the group products

Kazakhstan Aselsan Engineering LLP Kazakhstan

49 -

Marketing and sales of the group products

IGG Aselsan Integrated Systems LLC and Kazakhstan Aselsan Engineering LLP which are classified as non-current financial assets, were not included in the consolidation since they are newly established in 2011, have not started operations and their effect on the consolidated financial statements of the Group are deemed to be immaterial. 2.2 Comparative2.2 Comparative2.2 Comparative2.2 Comparative Information and Restatement of Information and Restatement of Information and Restatement of Information and Restatement of Prior Prior Prior Prior YearYearYearYear Consolidated Consolidated Consolidated Consolidated Financial Statements Financial Statements Financial Statements Financial Statements Consolidated financial statements of the Group have been prepared comparatively with the prior period in order to give information about financial position and performance trends. Group applied reclassifications in order to be in line with basis of the presentation of the current period consolidated financial statements. The effect of reclassifications on the consolidated financial statements of prior period is disclosed in Note 33 and explained in detail below: - The amount of TL 99.442.248 that was reported under “Deferred Tax Liability” as of 31 December 2010 is now reported in net under “Deferred Tax Assets” in the consolidated balance sheet. (31 December 2009: TL 58.584.397). - The amount of TL 48.512.180 that was reported under “Long-term expenses accruals” with respect to the expected losses of the projects in progress as of 31 December is reclassified under “Trade Payables” in the consolidated balance sheet. (31 December 2009: TL 22.478.914). - The prepaid taxes amount of TL 3.096.310 that was reported under “Other Current Assets” as of 31 December 2010 is recorded under “Other Payables” in the consolidated balance sheet (31 December 2009: TL 1.126.163). - The amount of TL 1.395.179 that was reported under “Intangible Assets” as of 31 December 2010 is now classified under “Inventories” (31 December 2009:TL 1.048.508). - The amount of TL 4.242.091 that was reported under “Other Operating Expenses” as of 31 December 2010 is classified under “Cost of Sales”.

- The amount of TL 3.291.183 that was reported under “Marketing, Sales and Distribution Expenses” as of 31 December 2010 is classified under “Cost of Sales”.


2.3 Changes in the Acc2.3 Changes in the Acc2.3 Changes in the Acc2.3 Changes in the Accounting Policiesounting Policiesounting Policiesounting Policies Significant changes in accounting policies are applied retrospectively and prior period financial statements are restated. The Group has made some changes to the accounting policies in the current period in accordance with IAS 8. These changes are explained below and the effects on the prior period consolidated financial statements have been disclosed in Note 33. - The Group restated its calculations with respect to “Construction Contracts” in accordance with IAS 11. In the prior accounting policy, if the business related physical deliveries within the contracts indicated physical completeness, the costs incurred between the last delivery date and the balance sheet date were assessed with a predetermined “appropriate level”, a terminology determined by the Group, and if an accumulation of project costs was exceeding that appropriate level, booking of revenue and expenses was performed based on the costs, except development costs, that were obtained by addition of the project development costs. Since the Group concluded that the profit margins obtained as a result of the policy above, differed from the overall profit margins for those projects and since certain project costs are carried forward in the balance sheet although there are indications of progress for those projects under IAS 11, the Group restated its accounting policy in accordance with IAS 11, to be the accounting policy as stated in Note 2.6. - The Group reassessed its estimates and calculations with respect to the R&D costs which provide basis for deferred tax calculations. The Group, instead of using a part of the result of the revaluation based on the expectations of the deductions on the deferred R&D costs deductible used in the prior period, considered the budget estimates depending on the deferred tax assets in total and restated the accounting policy in accordance with IAS 12 “Income Taxes”.

- The Group reassessed its calculations related with provisions for warranties by taking the operational circumstances into consideration in the scope of IAS 37 “Provisions, Contingent Assets and Contingent Liabilities”. In the previous years, provisions were being calculated for all sales performed based on past data. After the reassessment, the Group restated its accounting policy in accordance with IAS 37 and used budget estimations within the scope of warranties that need specific calculations for guarantee, and for the rest used estimations based on the previous years’ data. - The Group restated the elimination calculations of the subsidiaries within consolidation. The differences arising from the equity participation-capital eliminations are accounted under the profit and loss statement and the prior year financial statements are restated accordingly.

2.4 Changes in the Account2.4 Changes in the Account2.4 Changes in the Account2.4 Changes in the Accounting Estimates and Errorsing Estimates and Errorsing Estimates and Errorsing Estimates and Errors If changes in estimates in accounting policies are for only one period, changes are applied on the current year but if the changed estimates are for the following periods, new estimates are applied both on the current and following years prospectively. The Group has no significant changes to the accounting estimates in the current period.


The estimated errors in the accounting policies are applied retrospectively and the prior year’s financial statements are restated accordingly. 2.5 Adoption of New and Revised International Financial Reporting 2.5 Adoption of New and Revised International Financial Reporting 2.5 Adoption of New and Revised International Financial Reporting 2.5 Adoption of New and Revised International Financial Reporting Standards (IFRSs)Standards (IFRSs)Standards (IFRSs)Standards (IFRSs) (a)(a)(a)(a)New and revised IFRSs applied with no material effect on the New and revised IFRSs applied with no material effect on the New and revised IFRSs applied with no material effect on the New and revised IFRSs applied with no material effect on the

consolidated financial statementsconsolidated financial statementsconsolidated financial statementsconsolidated financial statements

The following new and revised IFRSs have been adopted in the current period. The application of these new and revised IFRSs has not had any material impact on the amounts reported for the current and previous years, but may affect the accounting for future transactions or arrangements. Amendments to IAS1 Presentation of Financial Statements (as part of Improvements to IFRSs issued in 2010)

The amendments to IAS 1 clarify that an entity may choose to disclose an analysis of other comprehensive income by item in the statement of changes in equity or in the notes to the financial statements.

IAS 24 Related Party Disclosures (as revised in 2009)

IAS 24 (as revised in 2009) has been revised on the following two aspects: (a) IAS 24 (as revised in 2009) has changed the definition of a related party and (b) IAS 24 (as revised in 2009) introduces a partial exemption from the disclosure requirements for government-related entities.

Amendments to IAS 32 Classification of Rights Issues

The amendments address the classification of certain rights issues denominated in a foreign currency as either equity instruments or as financial liabilities. Under the amendments, rights, options or warrants issued by an entity for the holders to acquire a fixed number of the entity's equity instruments for a fixed amount of any currency are classified as equity instruments in the financial statements of the entity provided that the offer is made pro rata to all of its existing owners of the same class of its non-derivative equity instruments. Before the amendments to IAS 32, rights, options or warrants to acquire a fixed number of an entity's equity instruments for a fixed amount in foreign currency were classified as derivatives. The amendments require retrospective application.

The application of the amendments has had no effect on the amounts reported in the current and prior years because the Group has not issued instruments of this nature.


Amendments to IFRS 3 Business Combinations As part of Improvements to IFRSs issued in 2010, IFRS 3 was amended to clarify that the measurement choice regarding non-controlling interests at the date of acquisition is only available in respect of non-controlling interests that are present ownership interests and that entitle their holders to a proportionate share of the entity's net assets in the event of liquidation. All other types of non-controlling interests are measured at their acquisition-date fair value, unless another measurement basis is required by other Standards. In addition, IFRS 3 was amended to provide more guidance regarding the accounting for share-based payment awards held by the acquiree's employees. Specifically, the amendments specify that share-based payment transactions of the acquiree that are not replaced should be measured in accordance with IFRS 2 Share-based Payment at the acquisition date (‘market-based measure’).

Amendments to IFRIC 14 Prepayments of a Minimum Funding Requirement

IFRIC 14 addresses when refunds or reductions in future contributions should be regarded as available in accordance with paragraph 58 of IAS 19; how minimum funding requirements might affect the availability of reductions in future contributions; and when minimum funding requirements might give rise to a liability. The amendments now allow recognition of an asset in the form of prepaid minimum funding contributions. The application of the amendments has not had material effect on the Group's consolidated financial statements.

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

The Interpretation provides guidance on the accounting for the extinguishment of a financial liability by the issue of equity instruments. Specifically, under IFRIC 19, equity instruments issued under such arrangement will be measured at their fair value, and any difference between the carrying amount of the financial liability extinguished and the consideration paid will be recognized in profit or loss. The application of IFRIC 19 has had no effect on the amounts reported in the current and prior years because the Group has not entered into any transactions of this nature.

Improvements to IFRSs issued in 2010

The application of Improvements to IFRSs issued in 2010 has not had any material effect on amounts reported in the consolidated financial statements.

(b) (b) (b) (b) New and revised IFRSs in issue but not yet effecNew and revised IFRSs in issue but not yet effecNew and revised IFRSs in issue but not yet effecNew and revised IFRSs in issue but not yet effective and not early tive and not early tive and not early tive and not early adopted by the Groupadopted by the Groupadopted by the Groupadopted by the Group The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective: Amendments to IFRS 7 Presentation – Transfer of Financial Assets;

offsetting of financial assets and financial liabilities


IFRS 9 Financial Instruments

IFRS 10 Consolidated Financial Statements

IFRS 11 Joint Arrangements

IFRS 12 Disclosure of Interest in Other Entities

IFRS 13 Fair Value Measurement Amendments to IAS 1 Presentation of Items of Other Comprehensive

Income

Amendments to IAS 12 Deferred Tax- Recovery of Underlying Assets

IAS 19 (2011) Employee Benefits

IAS 27 (2011) Separate Financial Statements

IAS 28 (2011) Investments in Associates and Joint Ventures IFRIC 20 Stripping Costs in the Production Phase of a

Surface Mine Amendments to IAS 32 Financial Instruments: Presentation – Offsetting of

a Financial Assets and Financial Liabilities

The amendments to IFRS 7 increase the disclosure requirements for transactions involving transfers of financial assets. These amendments are intended to provide greater transparency around risk exposures when a financial asset is transferred but the transferor retains some level of continuing exposure in the asset. The amendments also require disclosures where transfers of financial assets are not evenly distributed throughout the period. The group management does not anticipate that these amendments to IFRS 7 will have a significant effect on the Group’s disclosures. However, if the Group enters into other types of transfers of financial assets in the future, disclosures regarding those transfers may be affected. The amendments to IFRS 7 require an entity to disclose information about rights of offset and related agreements for financial instruments under an enforceable master netting agreement or similar arrangement. The new disclosures are required for annual or interim periods beginning on or after 1 January 2013. IFRS 9 issued in November 2009 introduces new requirements for the classification and measurement of financial assets. IFRS 9 amended in October 2010 includes the requirements for the classification and measurement of financial liabilities and for derecognition. Key requirements of IFRS 9 are described as follows: IFRS 9 requires all recognized financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement to be subsequently measured at amortized cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair values at the end of subsequent accounting periods.


The most significant effect of IFRS 9 regarding the classification and measurement of financial liabilities relates to the accounting for changes in the fair value of a financial liability (designated as at fair value through profit or loss) attributable to changes in the credit risk of that liability. Specifically, under IFRS 9, for financial liabilities that are designated as at fair value through profit or loss, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability's credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability's credit risk are not subsequently reclassified to profit or loss. Previously, under IAS 39, the entire amount of the change in the fair value of the financial liability designated as at fair value through profit or loss was presented in profit or loss. IFRS 9 was amended to defer the mandatory effective date of both the 2009 and 2010 versions of IFRS 9 to annual periods beginning on or after 1 January 2015. Prior to the amendments, application of IFRS 9 was mandatory for annual periods beginning on or after 1 January 2013. The amendments continue to permit early application. The amendments modify the existing comparative transition disclosures in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and IFRS 7 Financial Instruments: Disclosures. Instead of requiring restatement of comparative financial statements, entities are either permitted or required to provide modified disclosures on transition from IAS 39 Financial Instruments: Recognition and Measurement to IFRS 9 depending on the entity’s date of adoption and whether the entity chooses to restate prior periods. The group management anticipates that IFRS 9 will be adopted in the Group's consolidated financial statements for the annual period beginning 1 January 2015 and that the application of IFRS 9 may have significant impact on amounts reported in respect of the Group's financial assets and financial liabilities (e.g. the Group's investments in redeemable notes that are currently classified as available-for-sale investments will have to be measured at fair value at the end of subsequent reporting periods, with changes in the fair value being recognized in profit or loss). However, it is not practicable to provide a reasonable estimate of that effect until a detailed review has been completed. In May 2011, a package of five Standards on consolidation, joint arrangements, associates and disclosures was issued, including IFRS 10, IFRS 11, IFRS 12, IAS 27 (as revised in 2011) and IAS 28 (as revised in 2011). Key requirements of these five Standards are described below. IFRS 10 replaces the parts of IAS 27 “Consolidated and Separate Financial Statements” that deal with consolidated financial statements. SIC-12 “Consolidation – Special Purpose Entities” has been withdrawn upon the issuance of IFRS 10. Under IFRS 10, there is only one basis for consolidation that is control. In addition, IFRS 10 includes a new definition of control that contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the ability to use its power over the investee to affect the amount of the investor's returns.


Extensive guidance has been added in IFRS 10 to deal with complex scenarios. IFRS 11 replaces IAS 31 “Interests in Joint Ventures”. IFRS 11 deals with how a joint arrangement of which two or more parties have joint control should be classified. SIC-13 “Jointly Controlled Entities – Non-monetary Contributions by Venturers” has been withdrawn upon the issuance of IFRS 11. Under IFRS 11, joint arrangements are classified as joint operations or joint ventures, depending on the rights and obligations of the parties to the arrangements. In contrast, under IAS 31, there are three types of joint arrangements: jointly controlled entities, jointly controlled assets and jointly controlled operations. In addition, joint ventures under IFRS 11 are required to be accounted for using the equity method of accounting, whereas jointly controlled entities under IAS 31 can be accounted for using the equity method of accounting or proportionate accounting. IFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure requirements in IFRS 12 are more extensive than those in the current standards. These five standards are effective for annual periods beginning on or after 1 January 2015. Earlier application is permitted provided that all of these five standards are applied early at the same time. The Group management stated that the five standards mentioned above will be applied starting with 1 January 2013 and the following financial periods in the consolidated financial statements. These five standards might have a significant impact on the consolidated financial statements. Currently, the Group management could not determine the impact of the application of these standards on the consolidated financial statements yet. IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The Standard defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The scope of IFRS 13 is broad; it applies to both financial instrument items and non-financial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements, except in specified circumstances. In general, the disclosure requirements in IFRS 13 are more extensive than those required in the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy currently required for financial instruments only under IFRS 7 “Financial Instruments: Disclosures” will be extended by IFRS 13 to cover all assets and liabilities within its scope. IFRS 13 is effective for annual periods beginning on or after 1 January 2013, with earlier application permitted. The directors anticipate that IFRS 13 will be adopted in the Group's consolidated financial statements for the annual period beginning 1 January 2013 and that the application of the new Standard may affect the amounts reported in the financial statements and result in more extensive disclosures in the financial statements.


The amendments to IAS 1 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to IAS 1 require additional disclosures to be made in the other comprehensive income section such that items of other comprehensive income are grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss; and (b) items that will be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis. The amendments to IAS 1 are effective for annual periods beginning on or after 1 July 2012. The presentation of items of other comprehensive income will be modified accordingly when the amendments are applied in the future accounting periods. The amendments to IAS 12 are effective for annual periods beginning on or after 1 January 2012. The directors anticipate that the application of the amendments to IAS 12 in future accounting periods may result in adjustments to the amounts of deferred tax liabilities recognized in prior years regarding the Group's investment properties of which the carrying amounts are presumed to be recovered through sale. However, the directors have not yet performed a detailed analysis of the impact of the application of the amendments and hence have not yet quantified the extent of the impact. The amendments to IAS 19 change the accounting for defined benefit plans and termination benefits. The most significant change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments require the recognition of changes in defined benefit obligations and in fair value of plan assets when they occur, and hence eliminate the 'corridor approach' permitted under the previous version of IAS 19 and accelerate the recognition of past service costs. The amendments require all actuarial gains and losses to be recognized immediately through other comprehensive income in order for the net pension asset or liability recognized in the consolidated statement of financial position to reflect the full value of the plan deficit or surplus. The amendments to IAS 19 are effective for annual periods beginning on or after 1 January 2013 and require retrospective application with certain exceptions. The directors anticipate that the amendments to IAS 19 will be adopted in the Group's consolidated financial statements for the annual period beginning 1 January 2013 and that the application of the amendments to IAS 19 may have impact on amounts reported in respect of the Groups’ defined benefit plans. However, the directors have not yet performed a detailed analysis of the impact of the application of the amendments and hence have not yet quantified the extent of the impact. The amendments to IAS 32 are intended to clarify existing application issues relating to the offsetting rules and reduce the level of diversity in current practice. The amendments are effective for annual periods beginning on or after 1 January 2014.


2.6 Summary of Significant Accounting Policies2.6 Summary of Significant Accounting Policies2.6 Summary of Significant Accounting Policies2.6 Summary of Significant Accounting Policies RevenueRevenueRevenueRevenue

Revenue is measured at the fair value of the received or receivable. Revenue is reduced for estimated customer returns, rebates, and other similar allowances. Sale of goods Revenue from the sale of goods is recognized when all the following conditions are satisfied: The Group has transferred to the buyer the significant risks and rewards of ownership of the goods; The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; The amount of revenue can be measured reliably; It is probable that the economic benefits associated with the transaction will flow to the entity; and The costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services: Revenue from a contract to provide services is recognized by reference to the stage of completion of the contract. The stage of completion of the contract is determined as follows: Installation fees are recognized by reference to the stage of completion of the installation, determined as the proportion of the total time expected to install that has elapsed at the balance sheet date; Servicing fees included in the price of products sold are recognized by reference to the proportion of the total cost of providing the servicing for the product sold, taking into account historical trends in the number of services actually provided on past goods sold; and Revenue from time and material contracts is recognized at the contractual rates as labor hours are delivered and direct expenses are incurred. Revenue from construction contracts is recognized in accordance with the accounting policy outlined in the following pages.

Dividend and interest revenue: Dividend income from investments is recognized when the shareholder's right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably). Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be


measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition. Rental income: Rental income from properties is recognized on a straight-line basis over the term of the relevant lease. InventoriesInventoriesInventoriesInventories Inventories are stated at the lower of cost and net realizable value. Inventories are valued on the basis of the project according to the weighted average method. Net realizable value represents the estimated selling price less all estimated costs of completion and costs necessary to realize sales. When the net realizable value of inventory is less than cost, the inventory is written down to the net realizable value and the expense is included in statement of income/(loss) in the period the write-down or loss occurred. When the circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of the write-down is reversed. The reversal amount is limited to the amount of the original write-down.

Fixed AssetsFixed AssetsFixed AssetsFixed Assets Fixed assets are carried at cost less accumulated depreciation and any accumulated impairment losses. Properties in the course of construction for production, rental or administrative purposes, or for purposes not yet determined, are carried at cost, less any recognized impairment loss. Cost includes professional fees. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use. Depreciation is charged so as to write off the cost or valuation of assets, other than land and properties under construction, over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in accounting estimates for on a prospective basis. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. The gain or loss arising on the disposal or retirement of an item of fixed assets is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss. The maintenance and repair expenses arising from changing any part of the fixed assets can be realized if the economic benefit of the asset is increased. All other expenses are recorded in the expense accounts in the consolidated income statement when they are realized.


The useful lives of fixed assets are as follows:

Useful life Buildings 10-50 years Land improvements 15-17 years Machinery and equipment 3-30 years Vehicles 3-8 years Furniture and fixtures 2-20 years Other tangible assets 3-17 years

Intangible AIntangible AIntangible AIntangible Assetsssetsssetsssets Intangible assets acquired separately Intangible assets acquired separately are reported at cost less accumulated amortization and accumulated impairment losses. Amortization is charged on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in accounting estimates for on a prospective basis. Trademarks and licenses Acquired trademarks and licenses are shown at historical cost. Trademarks and licenses have a finite useful life and are carried at cost less accumulated amortization. Amortization is calculated using the straight-line method to allocate the cost of trademarks and licenses over their estimated useful lives Computer software Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized over their estimated useful lives. Internally-generated intangible assets – R&D expenditure Expenditure on research activities is recognized as an expense in the period in which it is incurred. An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following have been demonstrated: The technical feasibility of completing the intangible asset so that it will be available for use or sale; The intention to complete the intangible asset and use or sell it; The ability to use or sell the intangible asset; How the intangible asset will generate probable future economic benefits;


The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and The ability to measure reliably the expenditure attributable to the intangible asset during its development The amount initially recognized for internally-generated intangible assets is the sum of expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is charged to profit or loss in the period in which it is incurred. Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets acquired separately.

The useful lives of the intangible assets are as follows:

Useful life Rights 2-6 years Computer software 1-2 years Development expenditure 2-5 years

Impairment of non-financial assets Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. Borrowing CostsBorrowing CostsBorrowing CostsBorrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. When the Group borrows funds specifically for the purpose of the qualifying assets, the amount of borrowing costs eligible for capitalization is the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings.


FinancialFinancialFinancialFinancial InstrumentsInstrumentsInstrumentsInstruments Financial assets All financial assets are recognized and derecognized on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value. Financial assets are classified into the following specified categories: financial assets as ‘at fair value through profit or loss’ (FVTPL), ‘held-to-maturity investments’, ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Effective interest method The effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period to the net carrying amount on initial recognition. Income is recognized on an effective interest basis for debt instruments other than those financial assets designated as at FVTPL. Financial assets at FVTPL Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as held for trading unless they are designated as hedges. Available-for-sale financial assets Quoted equity investments and quoted certain debt securities held by the Group that are traded in an active market are classified as being available- for-sale financial assets and are stated at fair value. The Group also has investments in unquoted equity investments that are not traded in an active market but are also classified as available-for-sale financial assets and stated at cost since their value can’t be reliably measured. Gains and losses arising from changes in fair value are recognized in other comprehensive income and accumulated in the investments revaluation reserve with the exception of impairment losses, interest calculated using the effective interest method, and foreign exchange gains and losses on monetary assets, which are recognized in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. Dividends on available-for-sale equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established.


The fair value of available-for-sale monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. The foreign exchange gains and losses that are recognized in profit or loss are determined based on the amortized cost of the monetary asset. Other foreign exchange gains and losses are recognized in other comprehensive income. Loans and receivables Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortized cost using the effective interest method less any impairment. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortized cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss. With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized. Any increase in fair value subsequent to an impairment loss is recognized in their comprehensive income. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments which their maturities are three months or less from date of acquisition and that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.


Financial liabilities Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below. Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities. Financial liabilities at FVTPL Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as at FVTPL. Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability and is included in ‘other gains/losses’ line in the statement of comprehensive income. Other financial liabilities Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period to the net carrying amount on initial recognition. Financial LeasingFinancial LeasingFinancial LeasingFinancial Leasing Leasing- the group as lessor Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Amounts due from lessees under finance leases are recorded as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases. Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term.


Foreign Currency TForeign Currency TForeign Currency TForeign Currency Transactionsransactionsransactionsransactions The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the operational results and financial position of each entity are expressed in TL, which is the functional currency of the Company, and the presentation for consolidated financial statements In preparing the financial statements of the individual entities, transactions in currencies other than TL (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognized in profit or loss in the period in which they arise except for: Exchange differences which relate to assets under construction for future productive use, which are included in the cost of those assets where they are regarded as an adjustment to interest costs on foreign currency borrowings; Exchange differences on transactions entered into in order to hedge certain foreign currency risks (see below for hedging accounting policies); and

Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur, which form part of the net investment in a foreign operation, and which are recognized in the foreign currency translation reserve and recognized in profit or loss on disposal of the net investment. Earnings per SEarnings per SEarnings per SEarnings per Sharehareharehare Earnings per share, disclosed in the consolidated income statement, are determined by dividing the net income attributable to equity holders of the parent company by the weighted average number of shares outstanding during the period concerned. In Turkey, companies can increase their share capital by distributing “bonus shares” to shareholders from retained earnings. In computing earnings per share, such “bonus share” distributions are assessed as issued shares. Accordingly, the weighted average number of shares is computed by taking into consideration of the retrospective effects of the share distributions. Subsequent ESubsequent ESubsequent ESubsequent Eventsventsventsvents Subsequent events include all events that take place between the balance sheet date and the date of authorization for the release of the financial statements, although the events occurred after the announcements related to


the net profit/loss or even after the public disclosure of other selective financial information. In the case that events occur requiring an adjustment, the Group adjusts the amount recognized in its consolidated financial statements to reflect the adjustments after the balance sheet date. Provisions, CoProvisions, CoProvisions, CoProvisions, Contingent Liabilities and Contingent Assetsntingent Liabilities and Contingent Assetsntingent Liabilities and Contingent Assetsntingent Liabilities and Contingent Assets Provisions are recognized when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Segmental InformationSegmental InformationSegmental InformationSegmental Information Operations of the Group are technical system design, development, production, and after-sales services for various products for defense industry. Group’s operations are not only for the Ministry of Defense, they are also operated via Communication and Information Technologies(HBT), Defense System Technologies(SST), Radar Electronic Warfare and Intelligence Systems(REHİS), Microelectronics, Guidance and Electro-optics(MGEO). The Group in accordance with IFRS 8 “Operating Segments” and considering the operations and organizational structure does not report according to segments due to its nature of products and services, its customer segment or type for its products and services. Moreover, profit based reporting considering different Group Management is not applied yet. Group’s operations are mostly project based and, the reporting to the Board of Directors is based on contracts. The Group Managements are classified according to the volume of transactions rather than having different operational segments and new Group Managements may be formed in order to increase the management activities. Construction CConstruction CConstruction CConstruction Contractsontractsontractsontracts Cost of contracts is recognized when incurred. These costs include the costs that relate directly to the specific contract and the costs that are attributable to contract activity in general and can be allocated to the contract and the other costs that are specifically chargeable to the customer under the terms of the contract major part of the costs include the development expenses of the projects.


Where the outcome of a construction contract cannot be estimated reliably, revenue is recognized to the extent of contract costs incurred that it is probable will be recoverable. Where the outcome of a construction contract can be estimated reliably, revenue is recognized over the terms of the contract term. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense immediately. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable. The group uses the “percentage of completion method” to determine the appropriate amount to recognize in a given period. The stage of completion is measured by reference to the contract costs incurred up to the balance sheet date as a percentage of total estimated costs for each contract. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. They are presented as inventories, prepayments or other assets, depending on their nature. Each project contract is evaluated by the technical teams regarding the expected change in the upcoming costs and the profitability of the contracts that is determined as of the balance sheet dates. If purchases and collections in more than one currency is prevalent regarding a contract, then the purchasing and invoicing is determined based on the amount stated in the contract and the weighted average currency in the following financial years. Besides the amounts of the contracts subjected to escalation as of the balance sheet date, are estimated based on the contract details. Government grants, if any, are also taken into consideration while calculating the profitability of the contract. The grants are recognized by netting-off from the costs in accordance with IAS 20 “Accounting for Government Grants and Disclosure of Government Assistance”. The gross amount of due from customers for customer work all contracts in progress of which costs incurred plus recognized profits (less recognized losses) exceed progress billings are presented as an asset by the Group. Progress billings not yet paid by customers and retention are included within “trade and other receivables”. The gross amount of due to customers for contract work all contracts in progress of which progress billings exceed costs incurred plus recognized profits are presented as a liability by the Group(less recognized losses). Government GrantsGovernment GrantsGovernment GrantsGovernment Grants Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Specifically, government


grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognized as deferred revenue in the consolidated statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they become receivable. The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates. Taxes Calculated On the Basis of the Company’s EarningsTaxes Calculated On the Basis of the Company’s EarningsTaxes Calculated On the Basis of the Company’s EarningsTaxes Calculated On the Basis of the Company’s Earnings Turkish tax legislation does not permit a parent company and its subsidiary to file a consolidated tax return. Therefore, provisions for taxes, as reflected in the accompanying consolidated financial statements, have been calculated on a separate-entity basis. Income tax expense represents the sum of the tax currently payable and deferred tax.

Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases which are used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are


only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the period Current and deferred tax are recognized as an expense or income in profit or loss, except when they relate to items that are recognized outside profit or loss (whether in other comprehensive income or directly in equity), in which case the tax is also recognized outside profit or loss, or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over-cost. Employee BEmployee BEmployee BEmployee Benefitsenefitsenefitsenefits Termination and retirement benefits Under Turkish law and union agreements, lump sum payments are made to employees retiring or involuntarily leaving the Group. Such payments are considered as being part of defined retirement benefit plan as per International Accounting Standard No. 19 (revised) “Employee Benefits” (“IAS 19”). The retirement benefit obligation recognized in the consolidated financial statements represents the present value of the defined benefit obligation. Profit-sharing and bonus plans The Group recognizes a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the company’s shareholders after certain adjustments. The Group recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation.


The Group recognizes the cost of providing additional retirement bonuses comprising two months gross salary to employees who have completed 20 years of service and earned the right to retirement benefits. These compensations are deducted from the net values of the unrealized liability amounts and are reflected in the accompanying consolidated financial statements Statement of Cash FlowsStatement of Cash FlowsStatement of Cash FlowsStatement of Cash Flows Current period statements of cash flows are categorized and reported as operating, investing and financing. Cash flows from operating activities reflect cash flows generated from Group’s operating activities. Cash flows from investing activities summarize the Group’s cash flows used in or generated from investing activities (fixed and financial investments). Cash flows from financing activities summarize the Group’s cash flows from liabilities and repayments of these liabilities benefited in financing needs of the Group. Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments which their maturities are three months or less from date of acquisition and that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. NettingNettingNettingNetting----off off off off Financial assets and liabilities are disclosed with their net amounts in the balance sheet if there is a legal right to net-off or recoverability is possible, or if acquisition of asset and performance of obligation are realized simultaneously. NonNonNonNon----CurrentCurrentCurrentCurrent Assets Held for SAssets Held for SAssets Held for SAssets Held for Salealealeale Non-current assets are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell. The assets can be a part of the entity, disposal group as a single fixed asset. 2.7. Critical Accounting Judg2.7. Critical Accounting Judg2.7. Critical Accounting Judg2.7. Critical Accounting Judgeeeements and Estimatesments and Estimatesments and Estimatesments and Estimates Critical judgements in applying the entity’s accounting policies In the process of applying the entity’s accounting policies, which are described in note 2.6, management has made the following judgements that have the most significant effect on the amounts recognized in the financial statements:


Deferred tax Deferred tax assets and liabilities are recorded using substantially enacted tax rates for the effect of temporary differences between book and tax bases of assets and liabilities. Currently, there are deferred tax assets resulting from operating loss carry-forwards and deductible temporary differences, all of which could reduce taxable income in the future. Based on available evidence, both positive and negative, it is determined whether it is probable that all or a portion of the deferred tax assets will be realized. The main factors which are considered include future earnings potential; cumulative losses in recent years; history of loss carry-forwards and other tax assets expiring; the carry-forward period associated with the deferred tax assets; future reversals of existing taxable temporary differences; tax-planning strategies that would, if necessary, be implemented, and the nature of the income that can be used to realize the deferred tax asset. If based on the weight of all available evidence, it is the Group’s belief that taxable profit will not be available sufficient to utilize some portion of these deferred tax assets, then some portion of or all of the deferred tax assets are not recognized (Note: 27). Liabilities with respect to employment benefits The Group makes various assumptions on discount, inflation rate, wage increase rate, the probability of quitting voluntarily for calculating provisions for severance and retirement pays (Note: 16). Useful lives of tangible and intangible assets The Group amortizes the non-current assets based on the useful lives of those assets stated in the accounting policies (Note:11-12). Percentage of completion The Group uses the percentage of completion method in accounting for contracts in scope of IAS 11 “Construction Contracts”. Use of percentage of completion method requires the Group to estimate the services performed to date as a proportion of the total services to be performed. Moreover for projects that are estimated to end up with a loss, provision for loss is calculated (Note:10). The estimation of the total cost of the projects consists of the risks that may cause major changes in the adjustments of the fair values of assets and liabilities for the subsequent periods. Estimation of foreign exchange rates If purchases and collections in more than one currency is prevalent regarding the projects in accordance with IAS 11 “Construction Contracts”, then the purchasing and invoicing is determined based on the amount stated in the contract and the weighted average currency in the following financial years. Escalation As of the balance sheet dates, the amounts of the projects subject to escalation are calculated with respect to the provisions of the contracts and estimated in accordance with IAS 11 “Construction Contracts”.


Provision for guarantee expenses The Group calculates provision, according to the budgeted estimations for specific parts of the sales under the scope of warranty that needs specific guarantee calculations, and according to the realizations in previous years for the remaining part of the sales. The guarantee period for the projects completed by the Group are 2 years on average after the delivery (Note:14). Development expenses The management, as of balance sheet dates, assesses the recoveries of related expenses regarding the Group’s development activities. These expenses are started to be amortized with respect to their useful lives when their development phases are completed and it becomes probable that there is an associated economic benefit. When the development phase is completed and no economic benefit is foreseen, the related expenses are recognized in consolidated income statement (Note:12).

3.3.3.3. JOINT VENTURESJOINT VENTURESJOINT VENTURESJOINT VENTURES Where a Group entity undertakes its activities under joint venture arrangements directly, the Group’s share of jointly controlled assets and any liabilities incurred jointly with other ventures are recognized in the financial statements of the relevant entity and classified according to their nature. Liabilities and expenses incurred directly in respect of interests in jointly controlled assets are accounted for on an accrual basis. Income from the sale or use of the Group’s share of the output of jointly controlled assets, and its share of joint venture expenses, are recognized when it is probable that the economic benefits associated with the transactions will flow to/from the Group and their amount can be measured reliably. The joint ventures IGG Aselsan Integrated Systems LLC and Kazakhstan Aselsan Engineering LLP which are recorded under long-term financial investments, were excluded from the consolidation since their establishment was done in 2011 and as they do not significantly affect the consolidated results of the Group.

4.4.4.4. CASH AND CASH EQUIVALENTSCASH AND CASH EQUIVALENTSCASH AND CASH EQUIVALENTSCASH AND CASH EQUIVALENTS

31 December 2011

31 December 2010

Cash 42.751 65.737 Cheques received 30.496 - Demand deposits –TL 2.693.726 139.353 Foreign currency demand deposits 42.707 6.204.110 Time deposits-TL 96.654.421 270.767.150 Foreign currency time deposits 79.689.049 322.228.763 Accrued income 289.016 1.291.684 Other cash equivalents 17.995 - Total 179.460.161 600.696.797

As of 31 December 2011, the Group has TL 79.689.049 of foreign currency time deposits at various banks with maturities in January 2012 and interest rates between 1,00% and 5,65%.


As of 31 December 2011, the Group has TL 96.654.421 of time deposits at various banks with maturities between January-February 2012 and interest rates between 10,50% and 12,30%. As of 31 December 2010, the Group has TL 322.228.763 of foreign currency time deposits at various banks with maturities between January-March 2011 and interest rates between 1,00% and 3,75%.

As of 31 December 2010, the Group has a total of TL 270.767.150 time deposits at various banks with maturities between January-February 2011 and interest rates between 7,75% and 9,5%.

5.5.5.5. FINANCIAL FINANCIAL FINANCIAL FINANCIAL INVESTMENTSINVESTMENTSINVESTMENTSINVESTMENTS Current financial investments

a) Financial investments at fair value through profit or loss

31 December

2011

31 December

2010 Eurobonds 2.267.100 5.927.597 Total 2.267.100 5.927.597

The average interest rate on Eurobonds as of 31 December 2011 is 8% (31 December 2010: 6,44%).

Non-Current financial investments a) Investments that do not have quoted market prices and carried at cost The details of the Group’s investments and share percentages of subsidiaries, joint ventures and associates are as follows: Company’s name Ratio

(%)

31 December

2011

Ratio (%)

31 December

2010 Aselsan Baku 100 3.059.234 100 3.059.234 Roketsan Roket Sanayii ve Ticaret A.Ş. 15 5.134.992 15 5.134.992 Mikroelektronik Ar-Ge Tasarım ve Ticaret Limited A.Ş. 85 624.714 85 624.714 Aspilsan A.Ş. 1 147.462 1 147.462 Havaalanı İşletme ve Havacılık End. A.Ş. <1 86.953 <1 86.953 AselsanNet (*) - - 95 950.000 Aselsan Kazakhstan Engineering LLP 49 388.023 - - IGG Aselsan Integrated Systems LLC 49 42.837 - - Total 9.484.215 10.003.355 (*) Included in the consolidation as of 31 December 2011. The above available-for-sale equity investments amounting to TL 9.484.215 (31 December 2010: TL 10.003.355) do not have a quoted market value and


their fair values cannot be reliably measured as the range of reasonable fair value estimates is significant and the probabilities of the various estimates cannot be reasonably assessed. For this reason they are stated at cost less provision for diminution in value, if any

6.6.6.6. FINANCIAL LIABILITIESFINANCIAL LIABILITIESFINANCIAL LIABILITIESFINANCIAL LIABILITIES

31 December 2011

31 December 2010

Short-term financial liabilities 12.897.976 102.716.468 Current portion of long-term financial liabilities 993.918 454.101

Other short-term financial liabilities 1.198.109 869.927

Total short-term financial liabilities 15.090.003 104.040.496

Other long-term financial liabilities 124.627.727 39.860.947

Total financial liabilities 139.717.730 143.901.443

As of 31 December 2011, all of the current financial liabilities consist of Preshipment Export Loan. As of 31 December 2011, other current and non-current term financial liabilities amounting to TL 3.101.606 consist of the non-interest bearing borrowings obtained from Technology Development Foundation of Turkey (TTGV). A major part of non-current financial liabilities is composed of the loan amounting to USD 40.000.000 with an interest rate of 2,1% obtained from Undersecretariat for Defense Industries. A letter of guarantee of USD 40.000.000 was given for the related loan. The rest of the other non-current financial liabilities consists of the loan obtained from Undersecretariat for Defense Industries amounting to USD 25.000.000 with an interest rate of 3,5%. As of 31 December 2010, current financial liabilities amounting to TL 5.314.498 consists of the non-interest bearing loans obtained in order to cover payables to SGK and customs liabilities and maturities are in January 2011. The Group also has a loan of TL 97.000.000 with the interest rates of 7,40%-7,65% used for operations in the same period. As of 31 December 2010, the amount of TL 2.534.974 out of other current and non-current financial liabilities is composed of non-interest bearing borrowings obtained from TTGV in order to finance projects. The rest of the other non-current financial liabilities consists of the loan amounting USD 25.000.000 obtained from Undersecretariat for Defense Industries with the interest rate of 3,5%.


The breakdown of the loan repayments with respect to their maturities is as follows:

31 December

2011

31 December

2010 Within 1 year 15.090.003 104.040.496 Between 1-2 years 4.087.069 665.431 Between 2-3 years 7.527.118 3.357.882 Between 3-4 years 7.484.985 6.053.644 Between 4-5 years 83.128.653 5.999.373 Between 5-6 years 7.569.171 5.946.154 Between 6-7 years 7.565.731 5.946.154 Between 7-8 years 7.265.000 5.946.154 Between 8-9 years - 5.946.155 Total 139.717.730 143.901.443

7.7.7.7. TRADE RECEIVABLES AND PTRADE RECEIVABLES AND PTRADE RECEIVABLES AND PTRADE RECEIVABLES AND PAYABLESAYABLESAYABLESAYABLES

a) Short-term trade receivables

31 December

2011

(Restated) 31 December

2010

(Restated) 1 January

2010 Trade receivables 242.548.808 109.634.382 100.385.313 Receivables from related parties (Note 29) 27.849.372 8.145.755 12.792.996 Uninvoiced receivables from construction contracts in progress 2.324.771 9.337.151 12.119.003 Uninvoiced receivables from construction contracts in progress – related party (Note 29) 4.354.621 388.669 - Notes receivables 1.585.923 - 39.418 Discount on trade and notes receivables (1.467.586) (255.605) (339.382) Other trade receivables 9.067 1.543 38.012 Provision for doubtful trade receivables (-) (2.056.726) (1.819.535) (1.864.448) Total 275.148.250 125.432.360 123.170.912

The movement for the Group’s provision for doubtful receivables is as follows:

1 January- 31 December

2011


2010


2009 Opening balance 1.819.535 1.864.448 1.095.415 The effect of the entity included in the consolidation 11.138 - - Provision for the period 231.429 1.281 776.781 Provision released (5.376) (46.194) (7.748) Closing balance 2.056.726 1.819.535 1.864.448


b) Long-term trade receivables

31 December 2011


2010


2010 Long-term trade receivables

- 2.970.155 4.290.337 Uninvoiced receivables from construction contracts in progress 143.232.352 151.291.516 138.583.867 Uninvoiced receivables from construction contracts in progress – related party (Note 29) 43.106.955 13.198.119 9.879.228 Discount on trade receivables - (67.276) (54.698) Total 186.339.307 167.392.514 152.698.734

The distribution of trade receivables is as follows:

31 December 2011


2010


2010 Receivables from the public sector 246.623.661 180.631.644 199.283.783 Receivables from the private sector 92.026.122 33.129.512 27.960.156 Receivables from companies operating abroad 122.837.774 79.063.718 48.625.707 Total 461.487.557 292.824.874 275.869.646

Receivables from public represent the receivables that are due from Ministry of Defense, Undersecretariat for Defense Industries and other public enterprises. The Group’s operations are based on contracts. No collaterals are obtained from the customers. The characteristics and level of risks with respect to the trade receivables are disclosed in Note 30. c) Short-term trade payables

31 December 2011


2010


2010 Trade payables 128.102.347 64.356.944 54.463.025 Payables related to construction contracts in progress 18.160.329 41.816.899 30.421.847 Payables related to construction contracts in progress- related party (Note: 29) - - 1.622.166 Due to related parties (Note 29) 17.155.153 28.659.566 29.075.671 Discount on trade and notes payables (2.359.188) (398.917) (598.724) Other trade payables 322.594 527.297 303.820 Total 161.381.235 134.961.789 115.287.805


d) Long-term trade payables

31 December 2011


2010


2010 Long-term trade payables 6.104.648 11.723.723 26.510.266 Payables related to construction contracts in progress 26.747.061 23.378.409 - Notes payable 34.412 137.636 240.860 Discount on trade and notes payable (232.146) (351.458) (110.444) Total 32.653.975 34.888.310 26.640.682

The characteristics and level of risks with respect to the trade payables are disclosed in Note 30.

8.8.8.8. OTHER RECEIVABLES AND PAYABLESOTHER RECEIVABLES AND PAYABLESOTHER RECEIVABLES AND PAYABLESOTHER RECEIVABLES AND PAYABLES

a) Other current receivables 31 December

2011 31 December

2010 Receivables from tax office (*) 18.610.453 9.007.427 Other current receivables 829.117 37.327 Deposits and guarantees given 90.868 26.105 Due from personnel 143.956 122.188 Total 19.674.394 9.193.047 (*) These are receivables with respect to VAT returns and they are expected to be offset in the subsequent period.

b) Other non-current receivables 31 December

2011 31 December

2010 Deposits and guarantees given 108.542 68.316

c) Other current payables

31 December 2011


2010


2010 Social security premiums payable 13.444.857 5.067.461 4.204.034 Taxes and funds payable 6.937.900 3.137.547 5.474.930 Other current payables 991.401 182.616 162.665 Deposits and guarantees received 23.061 950 6.535 Other short-term payables due to related parties (Note 29) 22.047 21.092 16.513 Due to personnel 1.787.267 2.151.737 944.194 Due to personnel-related parties (Note 29) - 17.000 - Due to shareholders (Note 29) 148.060 149.302 116.834 Total 23.354.593 10.727.705 10.925.705

d) Other non-current payables

31 December 2011

31 December 2010

Deposits and guarantees received 82.297 5.000


9.9.9.9. INVENTORIESINVENTORIESINVENTORIESINVENTORIES

31 December

2011


2010


2010 Raw materials 325.808.643 277.649.945 281.714.175 Work in progress 123.231.391 133.990.848 170.761.871 Finished goods 41.801.240 39.753.924 50.384.716 Other inventories 9.448.480 9.420.899 3.376.595 Trade goods 9.247.845 1.554.925 1.407.163 Goods in transit (*) 47.630.558 16.931.560 15.124.226 Allowance for impairment on inventories (-) (5.252.998) (6.814.224) (275.305) Total 551.915.159 472.487.877 522.493.441

(*) Goods in transit includes the goods for which significant risks and rewards of ownership has passed to the Group as in FOB sales

The Group has allocated an impairment provision for raw materials, work in progress and finished goods in cases when their net realizable values are lower than their costs or when they are classified as slow-moving inventories. The provision was recognized in the cost of sales. The movement of the allowance for impairment on inventories:


2011


2010 Opening balance 6.814.224 275.305 Provision released (3.163.280) (275.305) Provision for the period 1.602.054 6.814.224 Closing balance 5.252.998 6.814.224

10.10.10.10. ASSETS AND LIABILITIASSETS AND LIABILITIASSETS AND LIABILITIASSETS AND LIABILITIES ES ES ES REGARDINGREGARDINGREGARDINGREGARDING CONSTRUCTION CONTRACTSCONSTRUCTION CONTRACTSCONSTRUCTION CONTRACTSCONSTRUCTION CONTRACTS

31 December

2011


2010


2010

Construction costs incurred plus recognized profits less recognized losses to date 2.808.427.671 3.003.116.512 2.101.165.783

Less: earned allowances (2.660.316.362) (2.894.096.365) (1.972.627.698)

Total 148.111.309 109.020.147 128.538.085

Amounts due from customers under construction contracts (Note: 7) 193.018.699 174.215.455 160.582.098 Amounts due to customers under construction contracts (Note: 7) (44.907.390) (65.195.308) (32.044.013)

Total 148.111.309 109.020.147 128.538.085


11.

11.

11.

11.

FIX

ED

AS

SE

TS

FIX

ED

AS

SE

TS

FIX

ED

AS

SE

TS

FIX

ED

AS

SE

TS

L

an

d

La

nd

im

pro

ve

me

nts

B

uil

din

gs

Ma

ch

ine

ry

an

d

eq

uip

me

nt

Ve

hic

les

Fu

rnit

ure

a

nd

fix

ture

s O

the

r fi

xe

d

ass

ets

(*)

L

ea

seh

old

im

pro

ve

me

nts

C

on

stru

cti

on

in

pro

gre

ss(*

*)T

ota

l C

os

t V

alu

eC

os

t V

alu

eC

os

t V

alu

eC

os

t V

alu

e

Op

en

ing

ba

lan

ce

as

of

1 J

an

ua

ry 2

011

19

.29

6.2

52

10.2

19.6

23

10

7.0

09

.67

2

36

0.2

13.8

11

2.9

66

.78

0

70

.96

9.1

39

3

1.9

73

.85

0

2.4

48

.13

0

29

.914

.00

4

63

5.0

11.2

61

Th

e e

ffe

ct

of

the

en

tity

in

clu

de

d i

n c

on

soli

da

tio

n

- -

- 4

77

.912

7

74

.88

6

56

7.6

49

5

5.0

88

-

- 1.

87

5.5

35

Ad

dit

ion

s -

15.2

37

7

.64

1 5

6.7

78

.19

3

49

.05

8

9.6

51.

57

5

- 5

8.6

68

4

8.5

43

.53

6

115

.10

3.9

08

D

isp

osa

ls

- (9

18)

- (3

.218

.28

1)

(13

1.6

74

) (8

34

.27

2)

(10

9.6

16)

- (6

56

.68

8)

(4.9

51.

44

9)

Tra

nsf

ers

3

84

.29

0

2.2

61.

06

3

38

.04

7.6

72

3

.34

9.4

96

-

192

.12

4

2.9

92

.08

2

2.2

10.9

00

(4

9.6

90

.18

6)

(25

2.5

59

) C

losi

ng

ba

lan

ce

as

of

3

1 D

ec

em

be

r 2

011

19

.68

0.5

42

12

.49

5.0

05

14

5.0

64

.98

5

417

.60

1.13

1 3

.65

9.0

50

8

0.5

46

.215

3

4.9

11.4

04

4

.717

.69

8

28

.110

.66

6

74

6.7

86

.69

6

A

cc

um

ula

ted

A

cc

um

ula

ted

A

cc

um

ula

ted

A

cc

um

ula

ted

De

pre

cia

tio

nD

ep

rec

iati

on

De

pre

cia

tio

nD

ep

rec

iati

on

O

pe

nin

g b

ala

nc

e a

s o

f 1

Ja

nu

ary

20

11

- 5

.70

6.0

22

3

8.4

58

.00

1 2

41.

23

5.3

14

1.7

21.

56

2

56

.92

8.5

08

17

.93

6.4

72

1.

161.

02

9

- 3

63

.14

6.9

08

T

he

eff

ec

t o

f th

e e

nti

ty

inc

lud

ed

in

co

nso

lid

ati

on

-

- -

164

.95

6

20

9.3

98

2

73

.84

8

18.3

50

-

- 6

66

.55

2

Ch

arg

e f

or

the

pe

rio

d

- 4

61.

817

4

.64

3.3

98

2

1.9

04

.39

1 5

16.4

79

4

.76

7.6

67

3

.86

2.3

79

6

93

.36

9

- 3

6.8

49

.50

0

Dis

po

sals

-

(918

) -

(3.2

00

.84

3)

(81.

140

) (8

34

.27

2)

(10

4.1

47

) -

- (4

.22

1.3

20

) C

losi

ng

ba

lan

ce

as

of

3

1 D

ec

em

be

r 2

011

-

6.1

66

.92

1 4

3.1

01.

39

9

26

0.1

03

.818

2

.36

6.2

99

6

1.13

5.7

51

21.

713

.05

4

1.8

54

.39

8

- 3

96

.44

1.6

40

Ne

t b

oo

k v

alu

e a

s o

f

31

De

ce

mb

er

20

11

19.6

80

.54

2

6.3

28

.08

4

101.

96

3.5

86

15

7.4

97

.313

1.

29

2.7

51

19.4

10.4

64

13

.19

8.3

50

2

.86

3.3

00

2

8.1

10.6

66

3

50

.34

5.0

56

(

*)

Inc

lud

es

the

mo

uld

mo

de

l de

vic

es

ma

nu

fac

ture

d b

y t

he

Gro

up

wit

h n

et

bo

ok

va

lue

of

TL

13

.13

7.0

08

. (

**)

Th

e f

ina

nc

e e

xp

en

ses

ca

pit

ali

zed

in

th

e c

urr

en

t p

eri

od

is

TL

58

1.8

53

(2

010

: -).


(*

)In

clu

de

s th

e m

ou

ld m

od

el d

ev

ice

s m

an

ufa

ctu

red

by

th

e G

rou

p w

ith

bo

ok

va

lue

of

TL

13

.98

6.5

57

.

La

nd

L

an

d

imp

rov

em

en

ts

Bu

ild

ing

s

Ma

ch

ine

ry

an

d

eq

uip

me

nt

Ve

hic

les

Fu

rnit

ure

a

nd

fix

ture

s O

the

r fi

xe

d

ass

ets

(*)

L

ea

seh

old

im

pro

ve

me

nts

C

on

stru

cti

on

in

p

rog

ress

T

ota

l

Co

st

Va

lue

Co

st

Va

lue

Co

st

Va

lue

Co

st

Va

lue

O

pe

nin

g b

ala

nc

e a

s o

f 1

Ja

nu

ary

20

10

13.7

23

.10

7

9.0

55

.07

0

107

.27

0.8

55

3

27

.36

9.5

76

3

.35

7.4

06

6

5.6

86

.15

0

26

.90

7.3

44

1.

94

7.5

62

14

.49

7.0

24

5

69

.814

.09

4

Ad

dit

ion

s 5

.27

5.0

52

-

4.4

94

3

0.1

45

.111

9

5.0

73

6

.24

9.9

43

-

514

3

1.0

95

.63

1 7

2.8

65

.818

D

isp

osa

ls

- -

(3.3

38

.25

3)

(2.2

81.

58

0)

(48

5.6

99

) (1

.85

6.1

37

) -

- (1

44

.07

3)

(8.1

05

.74

2)

Tra

nsf

ers

2

98

.09

3

1.16

4.5

53

3

.07

2.5

76

4

.98

0.7

04

-

88

9.1

83

5

.06

6.5

06

5

00

.05

4

(15

.53

4.5

78

) 4

37

.09

1 C

losi

ng

ba

lan

ce

as

of

3

1 D

ec

em

be

r 2

010

19

.29

6.2

52

10

.219

.62

3

107

.00

9.6

72

3

60

.213

.811

2

.96

6.7

80

7

0.9

69

.13

9

31.

97

3.8

50

2

.44

8.1

30

2

9.9

14.0

04

6

35

.011

.26

1

A

cc

um

ula

ted

A

cc

um

ula

ted

A

cc

um

ula

ted

A

cc

um

ula

ted

De

pre

cia

tio

nD

ep

rec

iati

on

De

pre

cia

tio

nD

ep

rec

iati

on

O

pe

nin

g b

ala

nc

e a

s o

f 1

Ja

nu

ary

20

10

- 5

.38

3.4

00

3

7.3

28

.14

4

22

5.4

18.3

79

1.

73

9.5

33

5

4.5

24

.06

1 14

.15

9.5

81

62

6.6

00

-

33

9.1

79

.69

8

Ch

arg

e f

or

the

pe

rio

d

- 3

22

.62

2

3.5

45

.611

18

.08

8.4

47

4

27

.53

3

4.4

17.7

91

3.7

76

.89

1 5

34

.42

9

- 3

1.11

3.3

24

Dis

po

sals

-

- (2

.415

.75

4)

(2.2

71.

512

) (4

45

.50

4)

(2.0

13.3

44

) -

- -

(7.1

46

.114

) C

losi

ng

ba

lan

ce

as

of

3

1 D

ec

em

be

r 2

010

-

5.7

06

.02

2

38

.45

8.0

01

24

1.2

35

.314

1.

72

1.5

62

5

6.9

28

.50

8

17.9

36

.47

2

1.16

1.0

29

-

36

3.1

46

.90

8

Ne

t b

oo

k v

alu

e a

s o

f

3

1 D

ec

em

be

r 2

010

19

.29

6.2

52

4

.513

.60

1 6

8.5

51.

67

1 11

8.9

78

.49

7

1.2

45

.218

14

.04

0.6

31

14.0

37

.37

8

1.2

87

.10

1 2

9.9

14.0

04

2

71.

86

4.3

53


The breakdown of the depreciation expenses with respect to the fixed assets is as follows:

31 December

2011 31 December

2010

Marketing, sales and distribution expenses 351.571 550.519 General administrative expenses 3.752.725 3.099.516 Inventories 9.131.773 5.179.975

Cost of sales 23.613.431 22.283.314 Total 36.849.500 31.113.324

12.12.12.12. INTANGIBLE ASSETS INTANGIBLE ASSETS INTANGIBLE ASSETS INTANGIBLE ASSETS

Rights

Capitalized Development

Costs

Other intangible assets (*) Total

CostCostCostCost ValuesValuesValuesValues Opening balance as of 1 January 2011 18.109.665 128.308.616 32.843.822 179.262.103 The effect of the entity included in consolidation 59.446 - 141.556 201.002 Additions 15.904 79.672.165 7.967.813 87.655.882 Disposals - (13.929.993) (4.463) (13.934.456) Closing balance as of 31 December 2011 18.185.015 194.050.788 40.948.728 253.184.531 Accumulated AmortizationAccumulated AmortizationAccumulated AmortizationAccumulated Amortization Opening balance as of 1 January 2011 17.836.312 22.608.106 26.015.031 66.459.449 The effect of the entity included in consolidation 8.235 - 100.780 109.015 Charge for the period 62.200 15.051.062 6.109.448 21.222.710 Disposals - (6.803.357) (3.543) (6.806.900) Closing balance as of 31 December 2011 17.906.747 30.855.811 32.221.716 80.984.274

Net book value as of 31 December 2011 278.268 163.194.977 8.727.012 172.200.257 (*) Other intangible assets include computer software licenses.


Rights

Capitalized Development

Cost

Other intangible assets (*) Total

CostCostCostCost ValueValueValueValue Opening balance as of 1 January 2010 (Previously reported) 18.159.988 118.022.112 25.884.226 162.066.326 The effect of restatement (Note: 33) - (11.549.088) - (11.549.088) Opening balance as of 1 January 2010 (Restated) 18.159.988 106.473.024 25.884.226 150.517.238 Additions 34.394 71.533.245 6.995.568 78.563.207 Disposals (3.101) (48.947.653) (59.478) (49.010.232) Transfers (81.616) (750.000) 23.506 (808.110)

Closing balance as of 31 December 2010 (Restated) 18.109.665 128.308.616 32.843.822 179.262.103 Accumulated AmortizationAccumulated AmortizationAccumulated AmortizationAccumulated Amortization Opening balance as of 1 January 2010 17.480.924 27.031.014 21.884.846 66.396.784 Charge for the period 390.514 7.303.125 4.152.834 11.846.473 Disposals (3.101) (11.726.033) (23.628) (11.752.762) Transfers (32.025) - 979 (31.046) Closing balance as of 31 December 2010 (Restated) 17.836.312 22.608.106 26.015.031 66.459.449

Net book value as of 31 December 2010 (Restated) 273.353 105.700.510 6.828.791 112.802.654 (*) Other intangible assets include computer software licenses.

The breakdown of amortization expenses related to intangible assets is as follows:

31 December

2011 31 December

2010

Marketing, sales and distribution expenses 157.895 162.566 General administrative expenses 1.075.720 1.312.189 R&D expenses 15.884.937 7.959.335 Inventories 1.181.209 466.709

Cost of sales 2.922.949 1.945.674 Total 21.222.710 11.846.473

13.13.13.13. GOVERNMENT GRANTS AND INCENTIVESGOVERNMENT GRANTS AND INCENTIVESGOVERNMENT GRANTS AND INCENTIVESGOVERNMENT GRANTS AND INCENTIVES

The deferred incentive income shown under short-term liabilities in the consolidated balance sheet is as follows:

31 December

2011


2010


2010 Government grants and incentives 6.162.438 3.093.356 2.164.680


Government grants shows the unearned proportion of the grant after the costs related with the completed parts of the projects are deducted from the grants taken by the Group for the ongoing projects that was obtained as of the balance sheet date. The incentive obtained consists of the incentives that are accrued in accordance with TÜBİTAK’s R&D recognition letter prepared with respect to the Group’s ongoing projects. The Group obtains capital support from “Support and Price Stabilization Fund” of Central Bank of Turkey via Undersecretariat of Foreign Trade’s consent. The Scientific and Technological Research Council of Turkey (TÜBİTAK) and Technology Development Foundation of Turkey (TTGV) act as intermediary in accordance with Communiqué No:98/10 published by the Money-Loans and Coordination Board The R&D expenditure deduction rate used as a tax benefit has been increased from 40% to 100% in accordance with the amended article 10 of the Tax Law numbered 5520 as a result ofthe amendment in article 35 of Law No. 5746 with respect to the Support of Research and Development Activities. The aforementioned law was enacted as of 1 April 2008 after its issue in the Official Gazette dated 12 March 2008, numbered 26814. R&D expenditure may be used as a tax deduction in the determination of the taxable income. If taxable income levels are not sufficient to absorb all available tax deductions, any unused research and development tax deduction is allowed to be carried forward to the next tax period. According to the item no.8 of the related law, all the costs related with research and development can be subjected to deduction until 31 December 2023.

14.14.14.14. PROVISIONS, CONTINGENT ASSETS AND LIABILITIESPROVISIONS, CONTINGENT ASSETS AND LIABILITIESPROVISIONS, CONTINGENT ASSETS AND LIABILITIESPROVISIONS, CONTINGENT ASSETS AND LIABILITIES

a) Short-term expense accruals

31 December 2011


2010


2010Provision for delay penalties and fines 9.997.244 244.869 3.050.844Provision for lawsuits 1.062.588 1.238.204 812.973Provision for guarantee expenses 53.341.666 41.494.380 36.061.063Provision for allowance of cost expenses 8.274.098 89.568 2.024.528Provision for copyright expenses 1.048.411 633.024 399.339Provision for employee health insurance expense 2.887.434 2.383.472 2.285.053Other 1.335 - -Total 76.612.776 46.083.517 44.633.800


The movement of the provision for delay penalties and fines is as follows:


2011

1 January-31 December

2010Opening balance 244.869 3.050.844Provision for the period 9.997.244 110.344Provision released (-) (244.869) (2.916.319)Closing balance 9.997.244 244.869 The movement of the provision for the pending lawsuits is as follows:

1 January- 1 January- 31 December

2011 31 December

2010 Opening balance 1.238.204 812.973 Provision for the period 175.000 455.231 Provision released (-) (350.616) (30.000) Closing balance 1.062.588 1.238.204

The movement of the provision for guarantee expenses is as follows:

1 January- (Restated) 1 January-

31 December 2011

31 December 2010

Opening balance (previously reported) 32.510.373 24.485.488 The effect of restatement (Note 2 and 33) 8.984.007 11.575.575 Opening balance as of 1 January (restated) 41.494.380 36.061.063 The effect of the company included in the consolidation 227.936 - Provision for the period 37.878.214 29.655.813 Provision released (-) (26.258.864) (24.222.496) Closing balance 53.341.666 41.494.380

The movement of the provision for copyright expenses is as follows:

1 January- 1 January-

31 December 2011

31 December2010

Opening balance 633.024 399.341Provision for the period 1.048.412 633.024Provision released (-) (633.025) (399.341)Closing balance 1.048.411 633.024 b) Long-term expense accruals

31 December

2011


2010


2010 Provision for delay penalties and fines 11.128.448 9.044.100 3.083.372


The movement of the provision for delay penalties and fines is as follows: 1 January- 1 January-

31 December2011

31 December2010

Opening balance 9.044.100 3.083.372 Provision for the period 2.084.348 5.960.728 Closing balance 11.128.448 9.044.100

c) Lawsuits

As of 31 December 2011 and 2010, according to the declarations written by the legal counselors, the lawsuits and executions in favor of and against the Group are as follows:

Description 31 December

2011 31 December

2010

i) Lawsuits filed by the Group and in progress 4.580.406 4.580.406

ii) Legal seizure proceedings filed by the Group 3.360.407 3.360.407

iii) Lawsuits filed against the Group and in progress 1.062.588 1.238.204

iv) Lawsuits with an adverse outcome for the Group within the period 119.128 119.128

15.15.15.15. COMMITMENTS AND CONTINGENCIESCOMMITMENTS AND CONTINGENCIESCOMMITMENTS AND CONTINGENCIESCOMMITMENTS AND CONTINGENCIES

a) Letters of guarantees received

31 December2011

31 December 2010

Letters of guarantees received from the customers 1.398.375 2.834.916 Letters of guarantees received from the suppliers 477.871.781 392.051.619 Collaterals received from the customers 11.657 11.657 Collaterals received from the suppliers 1.519.693 1.270.311

Cheques received from the suppliers 78.589 53.050 Mortgages received from the customers 784.600 149.600 Total 481.664.695 396.371.153


b) Deposits and guarantees given The Collaterals/Pledges and Mortgages (CPM) given by the Group as of 31 December 2011 is as follows:

31 December 2011 TL amount TL

US Dollar EURO UAE

Dirham Polish zloty

Indian rupee

A. Total amount of CPM given on behalf of the legal entity

-Collateral 3.663.220.332 376.866.008 1.301.555.876 332.149.124 26.759.651 2.424.322 30.000.000-Pledge - - - - - - -

-Mortgage - - - - - - - B. Total amount of CPM given against the subsidiaries included in full consolidation

-Collateral 47.222.500 - 25.000.000 - - - -

-Pledge - - - - - - -

-Mortgage - - - - - - - C. Total amount of CPM given to maintain operations and collect payables from 3.parties

-Collateral - - - - - - - -Pledge - - - - - - -

-Mortgage - - - - - - - D. Total amount of other CPM given i. Total Amount of CPM on behalf of the main partner


-Mortgage - - - - - - - ii. Total amount of CPM given on behalf of other group companies that do not cover B and C


-Mortgage - - - - - - - iii.Total amount of CPM on behalf of 3.parties that do not cover C.


-Mortgage - - - - - - -

TotalTotalTotalTotal 3.710.442.832 376.866.008 1.326.555.876 332.149.124 26.759.651 2.424.322 30.000.000

The ratio of the given other CPM to the Group’s equity as of 30 December 2011 is 0%.


The breakdown of the collateral/pledge/mortgage (“CPM”) of the Group as of 31 December 2010 is as follows:

31 December 2010 TL amount TL

US Dollar EURO UAE

Dirham Indian rupee Sterling

A. Total amount of CPM given on behalf of the legal entity

-Collateral 2.671.344.891 352.568.345 1.136.410.718 268.099.826 26.759.651 30.000.000 69.969 -Pledge - - - - - - -

-Mortgage - - - - - - - B. Total amount of CPM given against the subsidiaries included in full consolidation

-Collateral 38.650.000 - 25.000.000 - - - - -Pledge - - - - - - -

-Mortgage - - - - - - - C. Total amount of CPM given to maintain operations and collect payables from 3.parties


-Mortgage - - - - - - - D. Total amount of other CPM given

i. Total Amount of CPM on behalf of the main partner


-Mortgage - - - - - - - ii. Total amount of CPM given on behalf of other group companies that do not cover B and C


-Mortgage - - - - - - - iii. Total amount of CPM on behalf of 3.parties that do not cover C.


-Mortgage - - - - - - -

ToToToTotaltaltaltal 2.709.994.891 352.568.345 1.161.410.718 268.099.826 26.759.651 30.000.000 69.969

The ratio of the given other CPM by the Group’s equity as of 30 December 2010 is 0%.


16.16.16.16. EMPLOYEMPLOYEMPLOYEMPLOYMENTMENTMENTMENT BENEFITSBENEFITSBENEFITSBENEFITS a) Short-term employment benefits 31 December

2011 31 December

2010

Provision for annual leave and overtime 13.993.659 9.459.381

The movement of the provision for annual leave and overtime is as follows: 1 January -

31 December2011

1 January -31 December

2010 Opening balance 9.459.381 7.605.642 The effect of the entity included in consolidation 230.119 -Provision released (-) (6.331.377) (5.758.442)Provision for the period 10.635.536 7.612.181Closing balance 13.993.659 9.459.381

b) Long-term employment benefits

1 January - 1 January -31 December

2011 31 December

2010

Provision for severance pay 66.788.754 58.203.905

Provision for retirement pay 6.748.718 5.173.188

73.537.472 63.377.093

The movement for provisions for severance and retirement pays is as follows: 1 January -

31 December2011


2010Opening balance 63.377.093 52.267.100The effect of the entity included in consolidation 403.424 -Cost of service 10.934.703 10.241.390Interest cost 2.985.512 3.872.507Severance and retirement pays (4.163.260) (3.003.904)Closing balance 73.537.472 63.377.093

RetirementRetirementRetirementRetirement PPPPayayayay PPPProvisionsrovisionsrovisionsrovisions:::: Under the Turkish Labor Law, the Group is required to pay employment termination benefits to each employee who has qualified for such payment. Also, employees are required to be paid their retirement pay who retired by gaining right to receive according to in accordance with the provisions set out in law no: 2422 issued at 6 March 1981, law no: 4447 issued at25 August 1999 and the amended Article 60 of the existing Social Insurance Law No: 506. Some transitional provisions related to the pre-retirement service term were excluded from the law since the related law was amended as of 23 May 2002.


The amount payable consists of one month’s salary limited to a maximum of TL 2.805,04 (2010: TL 2.623,23) for each period of service at 31 December 2011. The liability is not funded, as there is no funding requirement. The provision has been calculated by estimating the present value of the future probable obligation of the Group arising from the retirement of employees. IAS 19 (“Employee Benefits”) requires actuarial valuation methods to be developed to estimate the entity’s obligation under defined benefit plans. Accordingly, the following actuarial assumptions were used in the calculation of the total liability:

31 December

2011 31 December

2010

Discount ratio (%) 4,66 4,66

Estimation of probability of retirement ratio (%) 99,07 99,0017.17.17.17. ORDER ADVANCES GIVEN AND RECEIVEDORDER ADVANCES GIVEN AND RECEIVEDORDER ADVANCES GIVEN AND RECEIVEDORDER ADVANCES GIVEN AND RECEIVED

a) Short-term order advances given 31 December

201131 December

2010 Short-term order advances given 216.719.273 129.390.026 Short-term order advances given to related parties (Note: 29) 13.058.775 24.461.914 Total 229.778.048 153.851.940

b) Long-term order advances given

31 December2011

31 December2010

Long-term order advances given 139.280.366 150.011.254

Long-term order advances given to related parties (Note: 29) 44.188.111 30.459.416Total 183.468.477 180.470.670 c) Short-term order advances received

31 December

2011

(Restated)31 December

2010


2010Order advances received 113.566.645 165.651.398 141.106.170Order advances received from related parties (Note: 29) 12.237.577 6.629.416 23.679.866Total 125.804.222 172.280.814 164.786.036 Short-term order advances received consists of the advances taken from 54 customers (31 December 2010: 42 customers) of which the first 10 of which form 95,39% (31 December 2010: 96,29%) of the total advances.


d) Long-term order advances received

31 December2011


2010


2010Order advances received 688.013.584 737.221.823 586.022.926Order advances received from related parties (Note: 29) 16.363.904 21.831.397 31.481.068Total 704.377.488 759.053.220 617.503.994 The long-term order advances received consists of the advances taken from 28 customers (31 December 2010: 31 customers) of which the first 10 of which form 99,59% (31 December 2010: 98,54%) of the total advances.

18.18.18.18. OTHER ASSETS AND LIABILITIESOTHER ASSETS AND LIABILITIESOTHER ASSETS AND LIABILITIESOTHER ASSETS AND LIABILITIES

a) Other current assets

31 December 2011


2010


2010Prepaid expenses 13.228.396 11.067.183 7.099.467VAT carried forward (*) 111.681.578 82.297.221 84.141.266Other VAT 2.678.862 1.057.718 64.233Prepaid taxes and funds 974.719 881.112 23.090Job advances given 439.401 188.872 62.176Due from personnel 3.078 - 94.359Other 414.809 239.337 200.034Total 129.420.843 95.731.443 91.684.625 (*) To the taxpayers (Contractor/the Group) who deliver goods and give services to the Natural Security Institutions (such as MOD and UFDI) that are to be approved by the customers (contacting authority) in terms of content and nature, Value Added Tax (VAT) is being exempted as of 1 March 2009 in accordance with General Declaration on Value Added Tax with the Serial Number 112 in the Official Gazette as of 12 February 2009. These amounts are usually not collected, but they are offset with other tax liabilities.

b) Other non-current assets

31 December2011

31 December2010

Prepaid expenses 3.076.217 1.978.386Advances given for fixed assets 5.376.051 9.547.818Prepaid taxes and funds 2.052.901 781.574Advances given for intangible assets - 550Total 10.505.169 12.308.328

c) Other current liabilities

31 December2011

31 December2010

Deferred income 4.056.800 291.852Accrued expenses 250.237 360.039Total 4.307.037 651.891


d) Other non-current liabilities 31 December

201131 December

2010Deferred income 7.065 -

19.19.19.19. SHARE CAPITALSHARE CAPITALSHARE CAPITALSHARE CAPITAL

CapitalCapitalCapitalCapital

Shareholders Share

(%) 31 December

2011Share

(%)31 December

2010TAFF 84,58 198.958.487 84,58 198.958.487Other shareholders 0,12 271.846 0,12 271.846Quoted in stock exchange 15,30 35.993.667 15,30 35.993.667Historical capital 100,00 235.224.000 100,00 235.224.000 Inflation Adjustment of Capital

132.773.042

132.773.042

Effect of inflation 367.997.042 367.997.042The Group’s issued capital is TL 235.224.000 that consists of 23.522.400.000 shares each of which is 1 kuruş(1% of 1 Turkish Lira). A total of 14.241.744.000 of the shares consists of Group A and 9.280.656.000 of the shares consists of Group B shares. All of the shares are nominative. Group A shares are nominative and Members of the Board are assigned from the holders of A type shareholders or from the ones nominated by A type shareholders. Moreover, when new shares are issued the proportion of nominative Group A shares prevalent in the issued capital are preserved. The Company increased its issued capital from TL 117.612.000 to TL 235.224.000 through the profit for 2009 as of 29 April 2010 and in accordance with the Board of Directors Decisions with the number 663. Restricted PRestricted PRestricted PRestricted Profitrofitrofitrofit RRRReserveseserveseserveseserves The legal reserves consist of first and second legal reserves, appropriated in accordance with the TCC. The first legal reserve is appropriated out of historical statutory profits of the prior year at the rate of 5% per annum, until the total reserve reaches 20% of the historical paid-in share capital. The second legal reserve is appropriated after the first legal reserve and dividends, at the rate of 10% per annum of all cash dividend distributions. As of 31 December 2011, The Group’s restricted reserves set aside from profit consists of the legal reserves. The total of the Group’s legal reserves are TL 42.731.216 (31 December 2010: TL 29.813.447).

Accumulated losses arising out of first time application of inflation adjustments could be deducted from the distributable profit as per inflation adjusted financial statements. In addition, this amount could be netted of from the period profit, accumulated profits, extraordinary reserves, legal reserves and inflation reserves. In addition, in accordance with the CMB’s requirements which were effective until 1 January 2008, at the first-time application of inflation adjustments on financial statements, equity items named “Capital issue premiums”, “Legal reserves”,


“Statutory reserves”, “Special reserves” and “Extraordinary reserves” were carried out nominal value in the balance sheet and restatement differences of such items were presented in equity under the “Shareholder’s equity inflation restatement differences” line item in aggregate. “Shareholders’ equity inflation restatement differences” related to all equity items could only be subject to the capital increase by bonus issue or loss deduction, while the carrying value of extraordinary reserves could be subject to the capital increase by bonus issue, cash profit distribution or loss offsetting. However, in accordance with the Communiqué Series XI No: 29 issued on 1 January 2008, and other related CMB’s announcements, “Paid-in capital”, “Restricted profit reserves” and “Premium in capital stock” should be carried at their registered amounts in statutory records. Restatement differences (e.g. inflation restatement differences) arising from the application of the Communiqué should be associated with: “Capital restatement differences” account, following the “Paid-in capital” line item in the financial statements, if such differences are arising from “Paid-in capital” and not added to capital. - “Retained earnings/ accumulated loss”, if such differences are arising from “Restricted profit reserves” and “Premium in capital stock” and has not been subjected to profit distribution or capital increase. Other equity items are carried at the amounts that are valued based on the CMB’s Financial Reporting Standards. Capital restatement differences can only be included in capital. Retained EarningsRetained EarningsRetained EarningsRetained Earnings Accumulated profits apart from the net profit for the year and extraordinary reserves which is accumulated profit by nature are shown under the retained earnings/ losses. As of 31 December 2011 the extraordinary reserves balance shown in retained earnings/losses is TL 451.128.533 (31 December 2010: TL 287.255.119).

Profit DProfit DProfit DProfit Disisisistributiontributiontributiontribution In accordance with the CMB, decree issued as of 27 January 2010, in relation to the profit distribution of earnings derived from the operations in 2009, minimum profit distribution is not required for listed companies, and accordingly, profit distribution should be made based on the requirements set out in the Boards’ Communiqué Serial: IV, No:27 “Principles ofDividend Advance Distribution of Companies that are subject to the Capital Markets Board Regulations”, terms of articles of corporations and profit distribution policies publicly disclosed by the companies. Furthermore, based on the afore-mentioned decree, companies that are required to prepare consolidated financial statements should calculate their net distributable profits, to the extent that they can be recovered from equity in their statutory records, by considering the net profit for the period in the consolidated financial


statements which are prepared and disclosed in accordance with the Communiqué Serial XI No:29. The dividends paid to shareholders during 2011 is TL 0,14 per 100 shares (Total dividends paid is TL 32.696.135) (2010: TL 0,25 per 100 shares, total dividends paid TL 57.629.880). The Group Management decided to pay dividend TL 0,1975 per 100 shares as of 8 March 2012 with respect to the current year. This dividend payment will be subjected to the shareholders’ approval in the General Assembly, and it has not been recognized as a liability in the financial statements yet. The total dividend payment to be made TL 46.456.740. Resources That Can be Made Subject to Profit Distribution: The Group’s other resources that may be made subject to allocation of profit distribution after deduction from the accumulated losses according to the legal records as of the balance sheet date is TL 451.128.533 (31 December 2010: TL 287.255.119).

20.20.20.20. SALES REVENUE AND COST OF SALESSALES REVENUE AND COST OF SALESSALES REVENUE AND COST OF SALESSALES REVENUE AND COST OF SALES

a) Sales Revenue 1 January -

31 December2011

(Restated)

1 January - 31 December

2010 Domestic sales 1.365.298.573 1.083.878.186 Export sales 141.282.643 124.753.555 Other revenues 1.276.141 7.243.288 Sales returns (-) (4.292.969) (2.899.808) Sales discounts (-) (1.685.398) (576.428) Total 1.501.878.990 1.212.398.793

b) Cost of Sales (-)


2011

(Restated)


2010 Cost of raw materials used 495.333.788 344.634.743 Personnel expenses 51.713.525 44.264.189 General production expenses 124.257.103 85.188.436 Change in work in progress 10.759.457 36.771.023 Change in finished goods (2.047.316) 10.630.792 Development expenses (*) 335.827.675 334.349.289 Cost of services given 43.080.909 22.401.719 Cost of merchandise goods sold 8.224.950 42.028 Other cost of sales 38.624.963 26.558.359 Total 1.105.775.054 904.840.578 (*) Development expenses consist of raw material, design, personnel, amortization and depreciation expenses.


21.21.21.21. R&DR&DR&DR&D EXPENSES, MARKETING, SALES AND DISTRIBUTION EXPENSES, GENERAL EXPENSES, MARKETING, SALES AND DISTRIBUTION EXPENSES, GENERAL EXPENSES, MARKETING, SALES AND DISTRIBUTION EXPENSES, GENERAL EXPENSES, MARKETING, SALES AND DISTRIBUTION EXPENSES, GENERAL ADMINISTRATIVE EXPENSESADMINISTRATIVE EXPENSESADMINISTRATIVE EXPENSESADMINISTRATIVE EXPENSES


2011


2010Marketing, sales and distribution expenses (-) (31.616.522) (23.556.254)General administrative expenses (-) (83.804.962) (72.124.806)R&D expenses (-) (48.925.095) (33.132.162)Total (164.346.579) (128.813.222)

22.22.22.22. OPERATING EXPENSES OPERATING EXPENSES OPERATING EXPENSES OPERATING EXPENSES BYBYBYBY NATURENATURENATURENATURE

a)Marketing, sales and distribution expenses (-)


2011


2010Personnel expenses (11.913.017) (8.353.498)Stamp duty expenses (5.153.034) (6.045.818)Overseas travel expenses (1.703.233) (1.459.732)Exhibition expenses (3.763.906) (728.301)Shipping and delivery expenses (493.246) (315.937)Advertising expenses (1.483.696) (716.063)Insurance expenses (403.695) (235.685)Promotion expenses (979.134) (1.117.830)Depreciation and amortization expenses (509.466) (713.086)Packaging expenses (395.443) (267.960)Domestic travel expenses (475.103) (316.224)Specimen expenses (1.360.563) (1.001.980)Electricity expenses (316.515) (215.840)Maintenance and repair expenses (326.926) (169.944)Agency and entertainment expenses (277.568) (139.946)Personnel transportation expenses (274.182) (219.038)Rent expenses (55.855) (49.900)Other (1.731.940) (1.489.472)Total (31.616.522) (23.556.254)


b) General administrative expenses(-)


2011


2010Personnel expenses (58.580.645) (49.913.024)Depreciation and amortization expenses (4.828.445) (4.411.706)Maintenance and repair expenses (2.632.972) (2.119.834)Electricity expenses (2.599.507) (2.816.629)Personnel transportation expenses (1.509.506) (1.459.579)Course and seminar expenses (615.301) (451.240)Insurance expenses (1.071.708) (859.354)Consultancy expenses (737.565) (866.496)Personnel meal expenses (875.098) (796.430)Furniture and fixture expenses (594.278) (571.235)Provisions for lawsuits expenses (267.532) (50.833)Rent expenses (841.433) (491.538)Other (8.650.972) (7.316.908)Total (83.804.962) (72.124.806)

c) R&D expenses (-)


2011


2010Equipment costs (5.686.449) (3.791.312)Personnel expenses (21.927.077) (16.631.529)Depreciation and amortization expenses (15.884.937) (7.959.335)Other (5.426.632) (4.749.986)Total (48.925.095) (33.132.162)

23.23.23.23. OTHER OPERATING INCOMEOTHER OPERATING INCOMEOTHER OPERATING INCOMEOTHER OPERATING INCOME/ (/ (/ (/ (EXPENSE)EXPENSE)EXPENSE)EXPENSE)

a)Other operating income


2011


2010Provisions released 359.522 2.505.003Social security incapacity to work income 793.069 850.420Rent income 26.390 -Gain on sale of fixed assets 173.739 375.982Insurance income for damages 561.313 399.534Free equipment and income 646.788 346.809Consultancy income 220.856 69.769Income from personnel 368.108 96.250Other income 1.067.164 854.304Total 4.216.949 5.498.071


b)Other operating expense


2011


2010Provision for lawsuits expenses - (445.231)Damage expenses (176.928) (79.380)Loss on sale of fixed assets (311.360) (326.708)Special communication tax (140.914) (154.036)Grants and aids (39.737) (60.056)Other expense and losses (929.593) (609.545)

Total (1.598.532) (1.674.956)

24.24.24.24. FINANCINGFINANCINGFINANCINGFINANCING INCOMEINCOMEINCOMEINCOME


2011


2010Interest income 17.724.493 27.264.863Gain on sale of securities 256.248 -Foreign exchange gains 339.169.818 254.245.539Discount interest income 3.256.561 1.188.626Dividend income 1.145.985 154.654Fair value difference or increase in value of financial assets reflected to loss - 167.525Other financial income 484.557 881.870Total 362.037.662 283.903.077

25.25.25.25. FFFFINANCINGINANCINGINANCINGINANCING EXPENSEEXPENSEEXPENSEEXPENSE


2011


2010Foreign exchange losses (467.894.880) (257.411.899)Discount interest expenses (2.441.517) (1.101.945)Short-term borrowing expenses (206.277) (7.878.003)Long-term borrowing expenses (1.474.228) (1.318.280)Fair value difference or depreciation of financial assets reflected to loss (430.297) (36.320)Total (472.447.199) (267.746.447)

26.26.26.26. ASSETS HELD FOR SALEASSETS HELD FOR SALEASSETS HELD FOR SALEASSETS HELD FOR SALE

The assets held for sale consists of the furniture and fixture and equipments that are decided to be sold and excluded from assets and those of which’s useful life has finished or about to be finished.


27.27.27.27. TAX ASSETS AND LIABILITIESTAX ASSETS AND LIABILITIESTAX ASSETS AND LIABILITIESTAX ASSETS AND LIABILITIES

31 December

2011 31 December

2010Corporate tax liabilities: Current corporate tax provision 917.110 -Prepaid taxes and funds (-) (809.688) - 107.422 -


2011

(Restated)1 January -

31 December2010

Tax income/(expense): Current corporate tax expenses (917.110) -Deferred tax income 37.353.918 27.943.217Total 36.436.808 27.943.217Corporate tax The Group is subject to Turkish corporate taxes. Provision is made in the accompanying consolidated financial statements for the estimated change based on the Group’s results for the year. Turkish tax legislation does not permit a parent company and its subsidiary to file a consolidated tax return. Therefore, provisions for taxes, as reflected in the accompanying consolidated financial statements, have been calculated on a separate entity bases. Corporate tax is applied on taxable corporate income, which is calculated from the statutory accounting profit by adding back non-deductible expenses, and by deducting dividends received from resident companies, other exempt income and investment incentives utilized. The effective tax rate in 2011 is 20% (2010: 20%) for the Group. In Turkey, advance tax returns are filed on a quarterly basis. Advance corporate income tax rate applied in 2011 is 20%. (2010: 20%). Losses can be carried forward for offset against future taxable income for up to 5 years. However, losses cannot be carried back for offset against profits from previous periods. Furthermore, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns between 1-25 April following the close of the accounting year to which they relate. Tax authorities may, however, examine such returns and the underlying accounting records and may revise assessments within five years.

Income withholding tax

In addition to corporate taxes, companies should also calculate income withholding taxes on any dividends distributed, except for companies receiving dividends who are resident companies in Turkey and Turkish branches of foreign companies. The rate of income withholding tax is 10% between 24 April 2003 and 22 July 2006.


This rate was changed to 15% commencing from 23 July 2006 with the Cabinet Decision 2206/10731. Undistributed dividends incorporated in share capital are not subject to income withholding taxes.

Deferred tax:

The Group recognizes deferred tax assets and liabilities based upon temporary differences arising between its financial statements as reported for IFRS purposes and its statutory tax financial statements. These differences usually result in the recognition of revenue and expenses in different reporting periods for IFRS and tax purposes and they are given below. For calculation of deferred tax asset and liabilities, the rate of 20% (2009: 20%) is used. In Turkey, the companies cannot declare a consolidated tax return, therefore subsidiaries that have deferred tax asset position were not netted off against subsidiaries that have deferred tax liabilities position and disclosed separately.

The details of deferred tax assets and liabilities of the Group are as follows: Deferred tax assets:

31 December 2011


2010


2010

Discount on receivables (293.517) (64.575) (78.816) Costs and provision for expected losses of construction contracts (181.287.733) (149.197.294) (112.389.563) Provision for doubtful receivables (255.062) (208.776) (203.245) Impairment provision for inventory (1.014.881) (1.362.845) (55.061) Provision for delay penalties and fines (2.264.043) (1.857.794) (1.226.843) Provision for guarantee expenses (10.668.334) (8.298.876) (7.212.213) Fair value adjustment on financial assets (9.682) (11.433) - Prepaid expenses (95.718) - - Provision for severance pay (13.357.751) (11.640.781) (9.564.681) Provision for retirement pay (1.349.744) (1.034.638) (888.739) Provision for annual leave and overtime (2.798.734) (1.891.875) (1.521.128) Assets held for sale - (1.540) (277) Provision for lawsuits (22.200) (67.223) (79.223) Accumulated Losses (1.616.632) (2.804.319) (3.388.546) Other (1.933) (4.506) (11.995) Deferred R&D incentive discount (70.872.246) (44.949.071) (20.749.992)


Deferred tax liabilities 31 December

2011


2010


2010 Discount on payables 534.366 161.041 150.917 Adjustment of progress payments for long-term construction contracts 181.570.472 157.492.474 120.696.160 Fair value adjustment on financial assets 73.813 127.062 - Adjustment on inventories 164.817 - 67.716 Revaluation of tangible and intangible assets 11.630.800 11.041.838 9.726.178 Other 5.065 - 99.437 Deferred tax assets (285.908.210) (223.395.546) (157.370.322) Deferred tax liabilities 193.979.333 168.822.415 130.740.408 Deferred tax assets – net ((((91.928.87791.928.87791.928.87791.928.877)))) ((((54.573.13154.573.13154.573.13154.573.131)))) ((((26.629.26.629.26.629.26.629.914914914914))))

The Group realized deferred tax assets amounting to TL 70.872.246 (31 December 2010: TL 44.949.071) on the R&D expenses amounting to TL 354.361.223 (31 December 2010: TL 224.745.355) in accordance with Law No: 5746 about supporting R&D activities as disclosed in Note 13. The Group realized tax assets amounting to TL 1.616.632 (31 December 2010: TL 2.804.319) on tax deductible financial losses of Mikes amounting to TL 8.083.159 (31 Dec. 2010: TL 14.021.593).

Expiration schedule of carry forward tax losses is as follows:

31 December

2011 31 December

2010

Expiring in 2014 8.083.159 14.021.593

Total 8.083.159 14.021.593

Deferred tax (assets)/liabilities: (Restated)


31 December 31 December

2011 2010

Opening balance (previously reported) 43.280.064 31.648.526

Effect of restatement (Note 33) 11.293.067 (5.018.612)

Opening balance as of 1 January (restated) 54.573.131 26.629.914

The effect of the entity included in consolidation 1.828 -

Realized in the income statement 37.353.918 27.943.217

Total 91.928.877 54.573.131


Tax reconciliations: (Restated)


31 December 31 December

2011 2010

Profit for the year 123.966.237 198.724.738

Income tax rate 20% 20%

Tax at the domestic income tax rate of 20 % 24.793.247 39.744.948

Tax effects of:

- Revenue that is exempt from taxation (3.043.952) (3.494.200) - Expenses that are not deductible in determining taxable profit 6.637.976 5.346.091

- R&D concessions and other allowances (64.535.478) (67.450.812)

- Effect of other adjustments (288.601) (2.089.244)

Tax income recognized in profit or loss (36.436.808) (27.943.217)

28.28.28.28. EARNINGS PER SHAREEARNINGS PER SHAREEARNINGS PER SHAREEARNINGS PER SHARE


2011

(Restated)1 January -

31 December2010

Common stock (unit, 1 share = 1 kuruş) 23.522.400.000 23.522.400.000 Net profit – TL 160.403.045 226.667.955 Earnings per 100 shares – TL 0,68 0,96

29.29.29.29. RELATED PARTY RELATED PARTY RELATED PARTY RELATED PARTY TRANSACTIONS TRANSACTIONS TRANSACTIONS TRANSACTIONS

Transactions between the Company and its subsidiaries which are related parties of the Company have been eliminated on consolidation, and are not disclosed in this note. The receivables from related parties usually arise from sales activities and are due 2 months after the date of sales. The receivables are unsecured by nature and bear no interest. The payables to related parties usually arise from the purchase activities and are due 2 months after the date of purchase. The receivables bear no interest.


Total amount of salaries and other short term benefits paid for key management year ended as of 31 December 2011 is TL 3.802.102 (31 December 2010: TL 3.267.183). The details of transactions between the Group and other related parties are disclosed below:


3

1 D

ec

em

be

r 2

011

R

ec

eiv

ab

les

P

ay

ab

les

Sh

ort

-te

rm

L

on

g-t

erm

Sh

ort

-te

rm

L

on

g-t

erm

Ba

lan

ce

s w

ith

re

late

d p

art

ies

T

rad

ing

Ad

va

nc

es

giv

en

Tra

din

g

A

dv

an

ce

s g

ive

n

T

rad

ing

Ad

va

nc

es

rec

eiv

ed

No

n-

tra

din

g

A

dv

an

ce

s re

ce

ive

d

Ma

in s

ha

reh

old

er

TA

FF

, its

su

bsi

dia

rie

s a

nd

a

sso

cia

tes

Ax

a S

igo

rta

A.Ş

.

-

-

-

-

12.5

80

-

22

.04

7

-

Esd

aş

Ele

ktr

on

ik S

is. S

an

. ve

Tic

. A.Ş

.

1.2

34

-

-

-

3

1.8

04

-

-

-

Ha

ve

lsa

n E

hsi

m A

.Ş.

-

2

85

.75

9

-

-

6

92

.92

3

-

-

-

Ha

ve

lsa

n H

av

a E

lek

tro

nik

Sa

n. v

e T

ic. A

.Ş.

-

6

59

.64

9

2

.58

7.5

85

1.0

46

.718

-

-

-

-

Ha

ve

lsa

n T

ek

no

loji

Ra

da

r S

an

. ve

Tic

. A.Ş

.

-

171.

00

6

-

-

2

99

.35

4

-

-

-

İşb

ir E

lek

trik

Sa

n. A

.Ş.

-

2

.96

7.0

02

-

1.2

75

.75

4

9

41.

47

5

-

-

-

Me

rce

de

s-B

en

z T

ürk

A.Ş

.

-

213

.62

1

-

-

-

-

-

-

No

rte

l Ne

two

rks

Ne

taş

Te

lek

om

ün

ika

syo

n A

.Ş.

-

5

.86

1.8

81

-

5

.918

.08

2

10

.73

5.8

41

-

-

-

ST

M S

av

un

ma

Te

kn

olo

jile

ri M

üh

. ve

Tic

. A.Ş

.

-

2.2

04

.913

-

4.6

89

.76

6

11

8.4

75

-

-

2.8

88

.26

9

Tü

rk H

av

ac

ılık

ve

Uza

y S

an

. A.Ş

.

4.2

17.9

04

6

0.0

00

3.0

09

.80

3

-

2

94

.00

0

3

.69

6.2

56

-

1.5

17.3

00

TA

FF

2.4

53

.93

9

-

-

-

-

515

.19

1

-

-

Su

bsi

dia

rie

s

Ase

lsa

n B

ak

ü

14

.42

3

-

-

-

-

-

-

-

Mik

roe

lek

tro

nik

Ar-

Ge

Ta

s. v

e T

ic. L

td. Ş

ti.

17

0.4

13

-

-

-

133

.33

8

-

-

-

Ass

oc

iate

s a

nd

aff

ilia

tes

Ask

eri

Pil

Sa

n. v

e T

ic. A

.Ş.

-

-

-

-

7

94

.40

4

-

-

-

Ro

ke

tsa

n R

ok

et

Sa

n. v

e T

ic. A

.Ş.

2

.13

9.9

18

63

4.9

44

1.6

97

.916

3

1.2

57

.79

1

2.9

91.

54

6

2

.76

5.8

73

-

11.9

58

.33

5

Jo

int

ve

ntu

res

an

d i

ts r

ela

ted

pa

rtie

s

Inte

rna

tio

na

l Go

lde

n G

rou

p (

*)

2

3.2

06

.16

2

-

35

.811

.65

1

-

-

5.2

60

.25

7

-

-

Ka

zak

hst

an

En

gin

ee

rin

g (

*)

-

-

-

-

10

9.4

13

-

-

-

Du

e t

o s

ha

reh

old

ers

-

-

-

-

-

-

148

.06

0

-

32

.20

3.9

93

13

.05

8.7

75

43

.10

6.9

55

44

.18

8.1

11

17

.15

5.1

53

12.2

37

.57

7

17

0.1

07

16.3

63

.90

4

(*)

Co

nsi

de

red

as

rela

ted

pa

rty

as

of

31

De

ce

mb

er

20

11 i

n a

cc

ord

an

ce

wit

h “

IAS

24

Re

late

d P

art

y D

isc

losu

res”

.


(Restated) 31 December 2010

Receivables Payables

Short-term Long-term Short-term Long-term

Balances with related parties Trading Advances

given Trading Advances

given Trading Advances

received Non-

trading Advances

received Main shareholder TAFF, its subsidiaries and associates

Axa Sigorta A.Ş. - - - - 15.650 - 21.092 -

Esdaş Elektronik Sis. San. ve Tic. A.Ş. 8.904 - - - 338.461 - - -

Havelsan Ehsim A.Ş. - 285.760 - - 1.085.439 - - -

Havelsan Hava Elektronik San. ve Tic. A.Ş. 49.306 - 4.687.899 1.260.598 - - - -

Havelsan Teknoloji Radar San. ve Tic. A.Ş. - 305.408 - - 553.928 - - -

İşbir Elektrik San. A.Ş. - 60.111 - - 40.132 - - -

Mercedes-Benz Türk A.Ş. 4.250 213.622 - - 776.392 - - -

Nortel Networks Netaş Telekomünikasyon A.Ş. - 4.439.031 - 89.339 8.948.838 - - -

STM Savunma Teknolojileri Müh. ve Tic. A.Ş. - 2.570.154 - 2.827.129 - - - -

Türk Havacılık ve Uzay San. A.Ş. 673.562 120.000 2.576.590 - - 3.593.205 - 4.978.435

TAFF 1.504.066 - - - - 827.453 - -

Subsidiaries

Aselsan Bakü 124.366 - - - 557.988 - - -AselsanNet Elekt. ve Hab. Sist. San. Tic. İnş. ve Taah. Ltd. Şti. (*) 1.412.451

15.508.480 - - 4.636.710 - - -

Associates and affiliates

Askeri Pil San. ve Tic. A.Ş. - 430.787 - - 57.905 - - -

Roketsan Roket San. ve Tic. A.Ş. 4.757.519 528.561 5.933.630 26.282.350 11.648.123 2.208.758 - 16.852.96

2

Due to shareholders - - - - - - 149.302 -

Payables to personnel - - - - - - 17.000 -

8.534.424 24.461.914 13.198.119 30.459.416 28.659.566 6.629.416 187.394 21.831.397

(*)Included in the consolidation as of 31 December 2011.


1 January - 31 December 2011 1 January - 31 December 2010Transactions with related parties Sales Purchases Sales Purchases Main shareholder TAFF, its subsidiaries and associates Axa Sigorta A.Ş. 303 172.900 - 204.238

Esdaş Elektronik Sis. San. ve Tic. A.Ş. 29.308 2.696.426 7.546 797.817

Havelsan Ehsim A.Ş. - 160.694 - 2.788.368

Havelsan Hava Elektronik San. ve Tic. A.Ş. 44.982.966 389.780 32.146.844 -

Havelsan Teknoloji Radar San. ve Tic. A.Ş. 7.506 1.855.535 45.171 1.899.975

İşbir Elektrik San. A.Ş. 23.327 5.325.317 - 611.086

Mercedes-Benz Türk A.Ş. - 221.487 3.602 716.801

Nortel Networks Netaş Telekomünikasyon A.Ş. 760.835 15.699.207 270.236 34.337.312

STM Savunma Teknolojileri Müh. ve Tic. A.Ş. 5.709.831 2.129.044 7.178.278 2.142.033

Türk Havacılık ve Uzay San. A.Ş. 32.009.979 311.309 19.705.546 502.991

TAFF 5.514.028 419.300 36.761.507 204.820

Subsidiaries

Aselsan Bakü 62.259 769.229 5.506 575.566

AselsanNet Elekt. ve Hab. Sist. San. Tic. İnş. ve Taah. Ltd. Şti. (*) - - 3.786.651 19.903.912

Mikroelektronik Ar-Ge Tas. ve Tic. Ltd. Şti. 144.417 2.116.759 - 1.062.562

Associates and affiliates

Askeri Pil San. ve Tic. A.Ş. 171.000 3.949.158 56.528 1.684.280

Roketsan Roket San. ve Tic. A.Ş. 35.748.416 872.795 33.593.366 25.409.760

Joint ventures and its related parties

International Golden Group (**) 60.392.874 202.204 - -

Kazakhstan Engineering (**) - 106.632 - -

185.557.049 37.397.776 133.560.781 92.841.521

(*) Included in the consolidation as of 31 December 2011. (**) Considered as related party as of 31 December 2011 in accordance with “IAS 24 Related Party Disclosures”. 30303030.... FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIESFINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIESFINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIESFINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

a) Capital risk management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance. The capital structure of the Group consists of debt, which includes the borrowings, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings. The risks that are associated with every equity item together with the Group’s cost of capital are evaluated by the board of directors. Based on the recommendations of the board, the Group aims to balance its overall capital structure through the


payment of dividends, new share issues and share buy-backs as well as the issue of new debt on the redemption of existing debt. The Group’s general strategy which was unchanged from 2010 and the ratio of liabilities to share capital as of 31 December 2011 and 2010 are as follows:

31 December 2011


2010 Total liabilities 1.373.227.857 1.387.527.619 Less: Cash and cash equivalents 179.460.161 600.696.797 Net debt 1.193.767.696 786.830.822 Total equity 1.018.816.390 885.277.154 Total capital 2.212.584.086 1.672.107.976 Net debt / total equity ratio 54% 47%

b) Financial risk factors: The Group’s activities expose it to a various financial risks: market risk, credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial performance. Risk management is carried out by a central treasury department (group treasury) under policies approved by the board of directors. Group treasury identifies, evaluates and hedges financial risks in close co-operation with the group’s operating units. Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group is mainly working with public sector and obtaining advance payments where appropriate, both from public sector and private sector entities. Financing needs arising from new contracts are satisfied by advances received when the projects start and milestone payments during the projects. The receivables are generallyfrom public sector and hence considered collectible. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually.


The credit risks as of 31 December 2011 is as follows:

31 December 2011

Receivables

Bank deposits Other

Trade receivables Other receivables

Related Party Third party

Related Party

Third party

Maximum net credit risk as of the balance date (A+B+C+D+E)

75.310.948 386.176.609 - 19.782.936 179.368.919 2.267.100

- The part of maximum risk under guarantee with collateral etc (*)

- 2.194.632 - - - -

A. Net book value of financial assets that are neither past due nor impaired

75.310.948 369.012.954 - 19.782.936 179.368.919 2.267.100

B. Net book value of financial assets that are renegotiated, if not that will be accepted as past due or impaired

- - - - - -

C. Net book value of financial assets that are past due but not impaired

- 17.163.655 - - - -

- The part under guarantee with collateral etc.

- - - - - -

D. Net book value of impaired assets

- - - - - -

- Overdue (gross carrying amount)

- 2.056.726 - - - -

- Impairment (-) - (2.056.726) - - - -

- The part of net value under guarantee with collateral etc.

- - - - -

- Undue (gross carrying amount)

- - - - - -

- Impairment (-) - - - - - -


- - - - - -

E. Factors that include off balance sheet credit risks

- - - - - -

(*) The guarantees consist of the letters of guarantees, checks and mortgages.


The credit risks as of 31 December 2010 is as follows:

31 December 2010

Receivables

Bank deposits Other

Trade receivables Other receivables

Related Party

Third Party

Related Party

Third party

Maximum net credit risk as of the balance date (A+B+C+D+E)

21.732.543 271.092.330 - 9.261.363 600.631.060 5.927.597

- The part of maximum risk under guarantee with collateral etc (*)

- 2.996.173 - - - -

A. Net book value of financial assets that are neither past due nor impaired

21.732.543 271.092.330 - 9.261.363 600.631.060 5.927.597

B. Net book value of financial assets that are renegotiated, if not that will be accepted as past due or impaired

- - - - - -

C. Net book value of financial assets that are past due but not impaired

- - - - - -

- The part under guarantee with collateral etc.

- - - - -

D. Net book value of impaired assets

- - - - -

- Overdue (gross carrying amount)

- 1.819.535 - - - -

- Impairment (-) - (1.819.535) - - - -


- - - - - -

- Undue (gross carrying amount) - - - - - -

- Impairment (-) - - - - - -


- - - - - -

E. Factors that include off balance sheet credit risks

- - - - - -

(*) The guarantees consist of the letters of guarantees, checks and mortgages.


The aging of the overdue receivables is as follows: 31 December

2011 31 December

2010 Overdue by 1-30 days 727.166 - Overdue by 1-3 months 6.050.199 - Overdue by 3-12 months 10.386.290 - Total receivables 17.163.655 -

No collateral is received for the overdue receivables. Liquidity risk Board of directors has built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of non-derivative financial liabilities based on the earliest payment date. The table includes both interest and principal cash flows.


T

he

ma

turi

tie

s o

f th

e f

ina

nc

ial

lia

bil

itie

s d

ete

rmin

ed

wit

h r

esp

ec

t to

th

e c

on

tra

cts

in

clu

din

g t

he

ex

pe

cte

d i

nte

rest

pa

ym

en

ts a

s o

f

3

1 D

ec

em

be

r 2

011

is

as

foll

ow

s:

Co

ntr

ac

tua

l M

atu

rity

A

na

lysi

sC

arr

yin

g

va

lue

To

tal

ca

sh o

utf

low

a

cc

ord

ing

to

co

ntr

ac

t (I

+II+

III+

IV)

Le

ss t

ha

n 3

M

on

ths

(I)

3-1

2 M

on

ths

(II)

1-

5 Y

ea

rs

(III

)

Mo

re t

ha

n

5 Y

ea

rs

(IV

) N

on

-de

riv

ati

ve

fin

an

cia

l in

stru

me

nts

Fin

an

cia

l li

ab

ilit

ies

13

9.7

17.7

30

14

6.5

98

.26

8

13.5

14.6

85

3

.16

5.0

46

10

7.4

77

.72

3

22

.44

0.8

14

Ex

pe

cte

d M

atu

rity

C

arr

yin

g

va

lue

To

tal

ca

sh o

utf

low

a

cc

ord

ing

to

co

ntr

ac

t (I

+II+

III+

IV)

Le

ss t

ha

n 3

M

on

ths

(I)

3-1

2 M

on

ths

(II)

1-

5 Y

ea

rs

(III

)

Mo

re t

ha

n

5 Y

ea

rs

(IV

) N

on

-de

riv

ati

ve

fin

an

cia

l in

stru

me

nts

Tra

de

pa

ya

ble

s

194

.03

5.2

10

196

.62

6.5

44

13

7.9

36

.00

6

25

.80

4.4

17

32

.88

6.1

21

-

Oth

er

pa

ya

ble

s 2

3.4

36

.89

0

23

.43

6.8

90

2

3.3

54

.59

3

- 8

2.2

97

-

Oth

er

sho

rt-t

erm

lia

bil

itie

s 4

.30

7.0

37

4

.30

7.0

37

4

.30

7.0

37

-

- -


T

he

dis

trib

uti

on

of

the

ma

turi

tie

s o

f n

on

-de

riv

ati

ve

fin

an

cia

l li

ab

ilit

ies

as

of

31

De

ce

mb

er

20

10 i

s a

s fo

llo

ws:

Co

ntr

ac

tua

l M

atu

rity

A

na

lysi

s C

arr

yin

g

va

lue

To

tal

ca

sh o

utf

low

a

cc

ord

ing

to

co

ntr

ac

t (I

+II+

III+

IV)

Le

ss t

ha

n 3

M

on

ths

(I)

3-1

2 M

on

ths

(II)

1-

5 Y

ea

rs

(III

)

Mo

re t

ha

n

5 Y

ea

rs

(IV

)N

on

-de

riv

ati

ve

fin

an

cia

l in

stru

me

nts

Fin

an

cia

l li

ab

ilit

ies

14

3.9

01.

44

3

143

.92

0.7

80

10

3.7

60

.53

6

28

1.0

63

1.

22

9.1

81

38

.65

0.0

00

Ex

ce

pte

d M

atu

rity

C

arr

yin

g

va

lue

To

tal

ca

sh o

utf

low

a

cc

ord

ing

to

co

ntr

ac

t (I

+II+

III+

IV)

Le

ss t

ha

n 3

M

on

ths

(I)

3-1

2 M

on

ths

(II)

1-

5 Y

ea

rs

(III

)

Mo

re t

ha

n

5 Y

ea

rs

(IV

) N

on

-de

riv

ati

ve

fin

an

cia

l in

stru

me

nts

Tra

de

pa

ya

ble

s

169

.85

0.0

99

17

0.6

00

.47

3

83

.47

8.4

06

5

2.5

85

.216

3

4.5

36

.85

1 -

Oth

er

pa

ya

ble

s 10

.73

2.7

05

10

.73

2.7

05

10

.72

7.7

05

-

5.0

00

-

Oth

er

sho

rt-t

erm

lia

bil

itie

s 6

51.

89

1 6

51.

89

1 6

51.

89

1 -

- -


Market risk management The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. Market risk exposures are supplemented by sensitivity analysis, and stress scenario analysis. There has been no change to the Group’s exposure to market risks or the manner in which it manages and measures the risk in the current year. Foreign currency risk management

Foreign currency denominated transactions cause foreign currency risk. Foreign exchange risk is managed with currency purchase/sale contracts which are based on approved policy. The distribution of carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date is as follows:


FOREIGN EXCHANGE POSITIONFOREIGN EXCHANGE POSITIONFOREIGN EXCHANGE POSITIONFOREIGN EXCHANGE POSITION

31 31 31 31 DecemberDecemberDecemberDecember 2011201120112011 TLTLTLTL EquivalentEquivalentEquivalentEquivalent

(F(F(F(Functionalunctionalunctionalunctional currencycurrencycurrencycurrency))))

US DollarUS DollarUS DollarUS Dollar EUREUREUREUROOOO Other (Other (Other (Other (TLTLTLTL

EquivalentEquivalentEquivalentEquivalent))))

1. Trade Receivables 149.307.359 40.620.339 29.699.485 -

2a. Monetary financial assets 82.179.928 38.786.158 3.639.676 22.115

2b. Non- monetary financial assets 167.577.409 46.386.745 30.916.790 4.403.036

3. Other 580.618 102.453 27.500 319.890

4. Current assets (1+2+3)4. Current assets (1+2+3)4. Current assets (1+2+3)4. Current assets (1+2+3) 399.645.314 399.645.314 399.645.314 399.645.314 125.895.695 125.895.695 125.895.695 125.895.695 64.283.451 64.283.451 64.283.451 64.283.451 4.745.041 4.745.041 4.745.041 4.745.041

5. Trade receivables 160.659.723 51.785.782 25.714.690 -

6a. Monetary trade receivables - - - -

6b. Non-monetary trade receivables 138.461.350 56.389.612 13.072.577 245

7. Other 1.133.590 213.728 289.361 22.737

8. Long8. Long8. Long8. Long----term assets (5+6+7)term assets (5+6+7)term assets (5+6+7)term assets (5+6+7) 300.254.663 300.254.663 300.254.663 300.254.663 108.389.1108.389.1108.389.1108.389.122 22 22 22 39.076.628 39.076.628 39.076.628 39.076.628 22.982 22.982 22.982 22.982

9. Total assets (4+8)9. Total assets (4+8)9. Total assets (4+8)9. Total assets (4+8) 699.899.977 699.899.977 699.899.977 699.899.977 234.284.817 234.284.817 234.284.817 234.284.817 103.360.079 103.360.079 103.360.079 103.360.079 4.768.023 4.768.023 4.768.023 4.768.023

10. Trade payables 87.636.158 13.851.498 21.514.831 8.894.121

11. Financial liabilities 15.088.921 7.987.729 368 -

12a. Other monetary financial liabilities 781.493 200.115 142.320 55.694 12b. Other non-monetary financial liabilities

71.977.265 33.240.088 3.750.941 23.514

13. Current liabilities (10+11+12)13. Current liabilities (10+11+12)13. Current liabilities (10+11+12)13. Current liabilities (10+11+12) 175.483.837 175.483.837 175.483.837 175.483.837 55.279.430 55.279.430 55.279.430 55.279.430 25.408.460 25.408.460 25.408.460 25.408.460 8.973.329 8.973.329 8.973.329 8.973.329

14. Trade payables 16.524.912 5.292.095 2.671.525 -

15. Financial liabilities 124.627.726 65.978.997 - -

16a. Other monetary financial liabilities 11.071.862 5.860.000 1.190 - 16b. Other non-monetary financial liabilities

479.933.980 170.956.821 64.249.792 -

17. Non17. Non17. Non17. Non----current liabcurrent liabcurrent liabcurrent liabilities (14+15+16)ilities (14+15+16)ilities (14+15+16)ilities (14+15+16) 632.158.480 632.158.480 632.158.480 632.158.480 248.087.913 248.087.913 248.087.913 248.087.913 66.922.507 66.922.507 66.922.507 66.922.507 ----

18. Total liabilities (13+17)18. Total liabilities (13+17)18. Total liabilities (13+17)18. Total liabilities (13+17) 807.642.317 807.642.317 807.642.317 807.642.317 303.367.343 303.367.343 303.367.343 303.367.343 92.330.967 92.330.967 92.330.967 92.330.967 8.973.329 8.973.329 8.973.329 8.973.329 19. Net asset/liability position of off-balance sheet derivative financial instruments (19a-19b)

- - - -

19a. Hedged total financial assets - - - -

19b. Hedged total financial liabilities - - - -

20. Net foreign currency asset/liability 20. Net foreign currency asset/liability 20. Net foreign currency asset/liability 20. Net foreign currency asset/liability (9(9(9(9----18+19)18+19)18+19)18+19)

(107.742.340)(107.742.340)(107.742.340)(107.742.340) (69.082.526)(69.082.526)(69.082.526)(69.082.526) 11.029.112 11.029.112 11.029.112 11.029.112 (4.205.306)(4.205.306)(4.205.306)(4.205.306)

21. Net foreign currency asset / liability 21. Net foreign currency asset / liability 21. Net foreign currency asset / liability 21. Net foreign currency asset / liability position of monetarposition of monetarposition of monetarposition of monetary items y items y items y items (1+2a+5+6a(1+2a+5+6a(1+2a+5+6a(1+2a+5+6a----10101010----11111111----12a12a12a12a----14141414----15151515----16a)16a)16a)16a)

136.415.938 136.415.938 136.415.938 136.415.938 32.021.845 32.021.845 32.021.845 32.021.845 34.723.617 34.723.617 34.723.617 34.723.617 (8.927.700)(8.927.700)(8.927.700)(8.927.700)

22. Fair value of derivative financial instruments used in foreign currency hedge

- - - -

23. Hedged foreign currency assets - - - -

24. Hedged foreign currency liabilities - - - -

25. Exports 82.482.409 82.482.409 82.482.409 82.482.409 31.904.659 31.904.659 31.904.659 31.904.659 12.311.659 12.311.659 12.311.659 12.311.659 534.474 534.474 534.474 534.474

26. Imports 564.578.465 564.578.465 564.578.465 564.578.465 175.687.242 175.687.242 175.687.242 175.687.242 88.714.401 88.714.401 88.714.401 88.714.401 23.656.876 23.656.876 23.656.876 23.656.876


FOREIGN EXCHANGE POSITIONFOREIGN EXCHANGE POSITIONFOREIGN EXCHANGE POSITIONFOREIGN EXCHANGE POSITION

31 December 201031 December 201031 December 201031 December 2010TLTLTLTL Equivalent Equivalent Equivalent Equivalent

(Functional (Functional (Functional (Functional currency)currency)currency)currency)

US DollarUS DollarUS DollarUS Dollar EUREUREUREUROOOO Other (Other (Other (Other (TLTLTLTL

EquivalenEquivalenEquivalenEquivalent)t)t)t)

1. Trade Receivables 55.335.247 28.080.185 5.818.789 -

2a. Monetary financial assets 334.852.414 182.413.436 25.786.384 2.362

2b. Non- monetary financial assets 100.716.876 43.019.326 15.899.789 1.628.740

3. Other 201 130 - -

4. Current assets (1+24. Current assets (1+24. Current assets (1+24. Current assets (1+2+3)+3)+3)+3) 490.904.738490.904.738490.904.738490.904.738 253.513.077253.513.077253.513.077253.513.077 47.504.96247.504.96247.504.96247.504.962 1.631.1021.631.1021.631.1021.631.102

5. Trade receivables 154.449.969 53.310.419 35.153.024 -

6a. Monetary trade receivables - - - -

6b. Non-monetary trade receivables 138.762.962 55.139.493 26.117.469 - 7. Other 6.977.184 3.069.055 1.088.542 1.894 8. Long8. Long8. Long8. Long----term assets (5+6+7)term assets (5+6+7)term assets (5+6+7)term assets (5+6+7) 300.190.115300.190.115300.190.115300.190.115 111.518.967111.518.967111.518.967111.518.967 62.359.03562.359.03562.359.03562.359.035 1.8941.8941.8941.894

9. Total assets (4+8)9. Total assets (4+8)9. Total assets (4+8)9. Total assets (4+8) 791.094.853791.094.853791.094.853791.094.853 365.032.044365.032.044365.032.044365.032.044 109.863.997109.863.997109.863.997109.863.997 1.632.9961.632.9961.632.9961.632.996

10. Trade payables 84.502.909 38.863.699 9.170.213 5.628.946

11. Financial liabilities 1.322.219 855.252 - -

12a. Other monetary financial liabilities 48.345 31.271 - - 12b. Other non-monetary financial liabilities

73.960.045 28.406.584 14.652.390 19.254

13. Current liabilities (10+11+12)13. Current liabilities (10+11+12)13. Current liabilities (10+11+12)13. Current liabilities (10+11+12) 159.833.518159.833.518159.833.518159.833.518 68.156.80668.156.80668.156.80668.156.806 23.822.60323.822.60323.822.60323.822.603 5.648.2005.648.2005.648.2005.648.200

14. Trade payables 16.242.566 4.211.733 4.749.025 -

15. Financial liabilities 39.860.947 25.783.278 - -

16a. Other monetary financial liabilities 9.044.100 5.850.000 - - 16b. Other non-monetary financial liabilities

558.805.112 264.411.898 73.214.737 -

17. Non17. Non17. Non17. Non----current liabilcurrent liabilcurrent liabilcurrent liabilities (14+15+16)ities (14+15+16)ities (14+15+16)ities (14+15+16) 623.952.725623.952.725623.952.725623.952.725 300.256.909300.256.909300.256.909300.256.909 77.963.76277.963.76277.963.76277.963.762 ----

18. Total liabilities (13+17)18. Total liabilities (13+17)18. Total liabilities (13+17)18. Total liabilities (13+17) 783.786.243783.786.243783.786.243783.786.243 368.413.715368.413.715368.413.715368.413.715 101.786.365101.786.365101.786.365101.786.365 5.648.2005.648.2005.648.2005.648.200 19. Net asset/liability position of off-balance sheet derivative financial instruments (19a-19b)

- - - -

19a. Hedged total financial assets - - - -

19b. Hedged total financial liabilities - - - -

20. Net foreign currency asset/liability 20. Net foreign currency asset/liability 20. Net foreign currency asset/liability 20. Net foreign currency asset/liability (9(9(9(9----18+19)18+19)18+19)18+19)

7.308.6107.308.6107.308.6107.308.610 (3.381.671)(3.381.671)(3.381.671)(3.381.671) 8.077.6328.077.6328.077.6328.077.632 (4.015.204)(4.015.204)(4.015.204)(4.015.204)

21. Net foreign currency asset / liability 21. Net foreign currency asset / liability 21. Net foreign currency asset / liability 21. Net foreign currency asset / liability position of monetary items position of monetary items position of monetary items position of monetary items (1+2a+5+6a(1+2a+5+6a(1+2a+5+6a(1+2a+5+6a----11110000----11111111----12a12a12a12a----14141414----15151515----16a)16a)16a)16a)

393.616.544393.616.544393.616.544393.616.544 188.208.807188.208.807188.208.807188.208.807 52.838.95952.838.95952.838.95952.838.959 (5.626.584)(5.626.584)(5.626.584)(5.626.584)

22. Fair value of derivative financial instruments used in foreign currency hedge

- - - -

23. Hedged foreign currency assets - - - -

24. Hedged foreign currency liabilities - - - -

25. Exports 70.980.62770.980.62770.980.62770.980.627 15.282.33815.282.33815.282.33815.282.338 23.736.35823.736.35823.736.35823.736.358 826.782826.782826.782826.782

26. Imports 324.379.068324.379.068324.379.068324.379.068 116.099.266116.099.266116.099.266116.099.266 62.365.37562.365.37562.365.37562.365.375 16.528.61616.528.61616.528.61616.528.616


Foreign currency sensitivity The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD and the EURO. The following table details the Group’s sensitivity to a 10% increase and decrease in the US Dollars and EURO. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the Group where the denomination of the loan is in a currency other than the currency of the lender or the borrower. A positive number indicates an increase in profit or loss.


Foreign currency sensitivity analysis

Foreign currency sensitivity tableForeign currency sensitivity tableForeign currency sensitivity tableForeign currency sensitivity table31 December 2011

Profit/Loss Equity

Appreciation

of foreign currency

Depreciation of foreign currency

Appreciation of foreign currency

Depreciation of foreign

currency Appreciation of US Dollars Appreciation of US Dollars Appreciation of US Dollars Appreciation of US Dollars against TL by 10%against TL by 10%against TL by 10%against TL by 10%

1- USD denominated net assets/liabilities

(13.048.998) 13.048.998 - -

2- Hedged amount against USD risk (-)

- - - -

3333---- Net effect of USD (1+2)Net effect of USD (1+2)Net effect of USD (1+2)Net effect of USD (1+2) (13.048.998)(13.048.998)(13.048.998)(13.048.998) 13.048.99813.048.99813.048.99813.048.998 ---- ----

Appreciation of EUAppreciation of EUAppreciation of EUAppreciation of EURO against TL by 10%RO against TL by 10%RO against TL by 10%RO against TL by 10%4- EURO denominated net assets/liabilities

2.695.294 (2.695.294) - -

5- Hedged amount against EURO risk (-)

- - - -

6666---- Net effect of EURO (4+5)Net effect of EURO (4+5)Net effect of EURO (4+5)Net effect of EURO (4+5) 2.695.2942.695.2942.695.2942.695.294 (2.695.294)(2.695.294)(2.695.294)(2.695.294) ---- ----

Foreign currency sensitivity tableForeign currency sensitivity tableForeign currency sensitivity tableForeign currency sensitivity table(Restated) 31 December 2010

Profit/Loss Equity


Depreciation of foreign currency


Depreciation of foreign

currency Appreciation of US Dollars against TL by 10%Appreciation of US Dollars against TL by 10%Appreciation of US Dollars against TL by 10%Appreciation of US Dollars against TL by 10%

1- USD denominated net assets/liabilities

(522.806) 522.806 - -

2- Hedged amount against USD risk (-)

- - - -

3333---- Net effect of USD (1+2)Net effect of USD (1+2)Net effect of USD (1+2)Net effect of USD (1+2) (522.806)(522.806)(522.806)(522.806) 522.806522.806522.806522.806 ---- ----

Appreciation of EURO against TL by 10%Appreciation of EURO against TL by 10%Appreciation of EURO against TL by 10%Appreciation of EURO against TL by 10%4- EURO denominated net assets/liabilities

1.655.188 (1.655.188) - -

5- Hedged amount against EURO risk (-)

- - - -

6666---- Net effect of EURO (4+5)Net effect of EURO (4+5)Net effect of EURO (4+5)Net effect of EURO (4+5) 1.655.188 1.655.188 1.655.188 1.655.188 (1.655.188)(1.655.188)(1.655.188)(1.655.188) ---- ----


Interest rate risk management As of 31 December 2011 and 2010, since all of the loans obtained by the Group are fixed-rate loans, the Group is not exposed to significant interest rate risk. As of 31 December 2011, since variables interest the Group has financial assets amounting to TL 2.267.100 (31 December 2010: TL 5.927.597). The Group is not exposed to significant interest rate risk. Price risk The Group usually enters into fixed price contracts, therefore, is not exposed to any major price risk. Hierarchy of fair value

The Group classifies the fair value calculations with respect to the base of the input data of each financial instrument using three levels of hierarchy. According to this, Level 1 contains the valuation techniques used for determining the market values of the financial instruments in the active market, Level 2 contains the direct and indirect valuation techniques that uses the observable current market transactions and Level 3 uses the valuation techniques without the observable current market transactions. As of 31 December 2011 and 31 December 2010, the Group’s financial assets at their fair values are as follows: 31 December 2011 Financial assets carried at the fair value in Financial assets carried at the fair value in Financial assets carried at the fair value in Financial assets carried at the fair value in the balance sheetthe balance sheetthe balance sheetthe balance sheet

LevelLevelLevelLevel 1111 LevelLevelLevelLevel 2222 LevelLevelLevelLevel 3333

Eurobonds 2.267.100 - - 31 December 2010 Financial assets carried at the fair value in Financial assets carried at the fair value in Financial assets carried at the fair value in Financial assets carried at the fair value in the balance sheetthe balance sheetthe balance sheetthe balance sheet

LevelLevelLevelLevel 1111 LevelLevelLevelLevel 2222 LevelLevelLevelLevel 3333

Eurobonds 5.927.597 - - As of 31 December 2011 and 31 December 2010, The Group does not hold any financial liabilities carried at fair value.


31.31.31.31. FINANCIAL INSTRUMENTSFINANCIAL INSTRUMENTSFINANCIAL INSTRUMENTSFINANCIAL INSTRUMENTS

CategoriesCategoriesCategoriesCategories of the financial instruments and their fair valuesof the financial instruments and their fair valuesof the financial instruments and their fair valuesof the financial instruments and their fair values

31 December 2011Financial assets

at fair value

Loans and receivables

(including cash and cash equivalents)

Assets held for sale

Financial liabilities at

amortized cost Carrying value Note Financial Assets Cash and cash equivalents - 179.460.161 - - 179.460.161 4 Financial investments 2.267.100 9.484.215 - 11.751.315 5 Trade receivables - 461.487.557 - - 461.487.557 7 Financial liabilities Borrowings - - - 139.717.730 139.717.730 6 Trade payables - - - 194.035.210 194.035.210 7

(Restated) 31 December 2010

Financial assets at fair value

Loans and receivables

(including cash and cash

equivalents) Assets held

for sale

Financial liabilities at

amortized cost Carrying value Note Financial Assets Cash and cash equivalents - 600.696.797 - - 600.696.797 4 Financial investments 5.927.597 - 10.003.355 - 15.930.952 5 Trade receivables - 292.824.874 - - 292.824.874 7 Financial liabilities Borrowings - - - 143.901.443 143.901.443 6 Trade payables - - - 169.850.099 169.850.099 7

(*) The Group’s management assesses that the carrying value reflects the fair value of financial instruments.


32.32.32.32. EVENTSEVENTSEVENTSEVENTS AFTER THE BALANCE SHEET DATEAFTER THE BALANCE SHEET DATEAFTER THE BALANCE SHEET DATEAFTER THE BALANCE SHEET DATE

The amount of contracts signed by the Group after the balance sheet date are approximately TL 2 million, USD 6 million and EURO 105 million.

33333333.... OTHER ISSUES AFFECTING THE CONSOLIDATED FINANCIAL STATEMENTS OTHER ISSUES AFFECTING THE CONSOLIDATED FINANCIAL STATEMENTS OTHER ISSUES AFFECTING THE CONSOLIDATED FINANCIAL STATEMENTS OTHER ISSUES AFFECTING THE CONSOLIDATED FINANCIAL STATEMENTS

MATERIALLY OR THOSE REQUIRED TO BE DISCLOSED FOR A CLEAR, MATERIALLY OR THOSE REQUIRED TO BE DISCLOSED FOR A CLEAR, MATERIALLY OR THOSE REQUIRED TO BE DISCLOSED FOR A CLEAR, MATERIALLY OR THOSE REQUIRED TO BE DISCLOSED FOR A CLEAR, UNDERSTANDABLE AND INTERPRETABLE PRESENTATIONUNDERSTANDABLE AND INTERPRETABLE PRESENTATIONUNDERSTANDABLE AND INTERPRETABLE PRESENTATIONUNDERSTANDABLE AND INTERPRETABLE PRESENTATION

The effects of the reclassifications and adjustments to the Group’s prior year consolidated financial statements which are enclosed in Note 2.2 and Note 2.3 are given below:


Previously Previously Previously Previously reportedreportedreportedreported

1 1 1 1 JanuaryJanuaryJanuaryJanuary 2010201020102010 ReclassificationsReclassificationsReclassificationsReclassifications AdjustmentsAdjustmentsAdjustmentsAdjustments

RestatedRestatedRestatedRestated 1 1 1 1 JanuaryJanuaryJanuaryJanuary

2010201020102010 Current AssetsCurrent AssetsCurrent AssetsCurrent Assets 1.899.096.369 1.899.096.369 1.899.096.369 1.899.096.369 (77.655)(77.655)(77.655)(77.655) ((((376.080.798376.080.798376.080.798376.080.798)))) 1.51.51.51.522.937.91622.937.91622.937.91622.937.916 Cash and cash equivalents 642.040.945 - - 642.040.945

Financial investments 5.950.552 - - 5.950.552 Trade receivables 194.811.907 - (71.640.995) 123.170.912 Other receivables 12.335.427 - - 12.335.427 Inventories 542.762.681 1.048.508 (21.317.748) 522.493.441 Assets on construction costs 281.994.274 - (281.994.274) - Order advances given 125.261.624 - - 125.261.624 Other current assets 93.938.569 (1.126.163) (1.127.781) 91.684.625 Non-current assets held for sale 390 - - 390

NonNonNonNon----current assetscurrent assetscurrent assetscurrent assets 585.346.596 585.346.596 585.346.596 585.346.596 (59.632.905)(59.632.905)(59.632.905)(59.632.905) 122.317.560122.317.560122.317.560122.317.560 648.031.251648.031.251648.031.251648.031.251

Trade receivables 14.861.982 - 137.836.752 152.698.734 Other receivables 124.128 - - 124.128 Financial investments 9.963.235 - - 9.963.235 Fixed Assets 230.634.396 - - 230.634.396 Intangible assets 95.669.542 (1.048.508) (10.500.580) 84.120.454 Order advances given 137.707.633 - - 137.707.633 Deferred tax asset 90.232.923 (58.584.397) (5.018.612) 26.629.914 Other non-current assets 6.152.757 - - 6.152.757

TOTOTOTOTAL ASSETSTAL ASSETSTAL ASSETSTAL ASSETS 2.484.442.965 2.484.442.965 2.484.442.965 2.484.442.965 (59.710.560)(59.710.560)(59.710.560)(59.710.560) ((((253.763.238253.763.238253.763.238253.763.238)))) 2.170.969.1672.170.969.1672.170.969.1672.170.969.167



(Previously (Previously (Previously (Previously reported)reported)reported)reported)

1 1 1 1 JanuaryJanuaryJanuaryJanuary 2010201020102010 ReclassificationsReclassificationsReclassificationsReclassifications AdjustmentsAdjustmentsAdjustmentsAdjustments

(Restated)(Restated)(Restated)(Restated) 1 1 1 1 JanuaryJanuaryJanuaryJanuary

2010201020102010

Current liabilitiesCurrent liabilitiesCurrent liabilitiesCurrent liabilities 793.420.165793.420.165793.420.165793.420.165 (1.126.163)(1.126.163)(1.126.163)(1.126.163) (76.191.968)(76.191.968)(76.191.968)(76.191.968) 716.102.034716.102.034716.102.034716.102.034 Financial liabilities 370.019.636 - - 370.019.636 Trade payables 75.834.200 - 39.453.605 115.287.805 Other payables 12.051.868 (1.126.163) - 10.925.705 Government grants 11.643.422 - (9.478.742) 2.164.680 Provision for payables 39.728.918 - 4.904.882 44.633.800

Provision for employment benefits 7.605.642 - - 7.605.642 Advances received 275.857.749 - (111.071.713) 164.786.036 Other non-current liabilities 678.730 - - 678.730 NonNonNonNon----currentcurrentcurrentcurrent lllliabilitiesiabilitiesiabilitiesiabilities 1.031.158.2641.031.158.2641.031.158.2641.031.158.264 (58.584.397)(58.584.397)(58.584.397)(58.584.397) (233.409.990)(233.409.990)(233.409.990)(233.409.990) 739.163.877739.163.877739.163.877739.163.877 Financial liabilities 39.668.729 - - 39.668.729 Trade payables 3.276.446 22.478.914 885.322 26.640.682 Provision for payables 25.562.286 (22.478.914) - 3.083.372 Provision for employment benefits 52.267.100 - - 52.267.100 Deferred tax liability 58.584.397 (58.584.397) - - Advances received 851.799.306 - (234.295.312) 617.503.994 EQUITYEQUITYEQUITYEQUITY 659.864.536659.864.536659.864.536659.864.536 ---- 55.838.72055.838.72055.838.72055.838.720 715.703.256715.703.256715.703.256715.703.256 Shareholder’s Equity Shareholder’s Equity Shareholder’s Equity Shareholder’s Equity Attributable to Equity Attributable to Equity Attributable to Equity Attributable to Equity Holders of the ParentHolders of the ParentHolders of the ParentHolders of the Parent 661.354.800661.354.800661.354.800661.354.800 ---- 54.406.69954.406.69954.406.69954.406.699 715.761.499715.761.499715.761.499715.761.499 Share capital 117.612.000 - - 117.612.000 Adjustment of share capital 132.773.042 - - 132.773.042 Other funds 889.350 - (889.350) - Restricted reserves set aside from profits 20.173.095 - - 20.173.095 Retained earnings (*) 204.542.318 - 55.296.049 259.838.367 Net profit / (loss) for the period (*) 185.364.995 - - 185.364.995 Minority sharesMinority sharesMinority sharesMinority shares (1.490.264)(1.490.264)(1.490.264)(1.490.264) ---- 1.432.0211.432.0211.432.0211.432.021 (58.243)(58.243)(58.243)(58.243) TOTOTOTOTAL LIABILITIES TAL LIABILITIES TAL LIABILITIES TAL LIABILITIES AND EQUITYAND EQUITYAND EQUITYAND EQUITY 2.484.442.9652.484.442.9652.484.442.9652.484.442.965 (59.710.560)(59.710.560)(59.710.560)(59.710.560) ((((253.763.238253.763.238253.763.238253.763.238)))) 2.170.969.1672.170.969.1672.170.969.1672.170.969.167

(*) As explained in Note 2.3 and Note 33, since the opening adjustments to restate the prior year financial statements in accordance with IAS 8 are booked as of 1 January 2010, restatement effects on the profit and loss statement for 2009 are presented in the retained earnings as of 1 January 2010.



PreviouslPreviouslPreviouslPreviously y y y reportedreportedreportedreported

31 December31 December31 December31 December 2010201020102010 ReclassificationsReclassificationsReclassificationsReclassifications AdjustmentsAdjustmentsAdjustmentsAdjustments

RestatedRestatedRestatedRestated 31 December31 December31 December31 December

2010201020102010

Current assetsCurrent assetsCurrent assetsCurrent assets 2.003.805.4312.003.805.4312.003.805.4312.003.805.431 (1.701.131)(1.701.131)(1.701.131)(1.701.131) (538.782.848)(538.782.848)(538.782.848)(538.782.848) 1.463.321.4521.463.321.4521.463.321.4521.463.321.452 Cash and cash equivalents 600.696.797 - - 600.696.797 Financial investments 5.927.597 - - 5.927.597 Trade receivables 307.785.288 - (182.352.928) 125.432.360 Other receivables 9.193.047 - - 9.193.047 Inventories 487.500.375 1.395.179 (16.407.677) 472.487.877 Assets on construction contracts 339.506.821 - (339.506.821) - Order advances given 153.851.940 - - 153.851.940 Other current assets 99.343.175 (3.096.310) (515.422) 95.731.443

Assets held for sale 391 - - 391

NonNonNonNon----current assetscurrent assetscurrent assetscurrent assets 752.113.424752.113.424752.113.424752.113.424 (100.837.427)(100.837.427)(100.837.427)(100.837.427) 158.207.324158.207.324158.207.324158.207.324 809.483.321809.483.321809.483.321809.483.321

Trade receivables 27.185.166 - 140.207.348 167.392.514 Other receivables 68.316 - - 68.316 Financial investments 10.003.355 - - 10.003.355 Fixed assets 271.864.353 - - 271.864.353 Intangible assets 107.490.924 (1.395.179) 6.706.909 112.802.654 Order advances given 180.470.670 - - 180.470.670 Deferred tax assets 142.722.312 (99.442.248) 11.293.067 54.573.131 Other non-current assets 12.308.328 - - 12.308.328

TOTAL ASSETSTOTAL ASSETSTOTAL ASSETSTOTAL ASSETS 2.755.918.8552.755.918.8552.755.918.8552.755.918.855 (102.538.558)(102.538.558)(102.538.558)(102.538.558) (380.575.524)(380.575.524)(380.575.524)(380.575.524) 2.272.804.7732.272.804.7732.272.804.7732.272.804.773



(Previously (Previously (Previously (Previously reported) reported) reported) reported)

31 December31 December31 December31 December 2010201020102010 ReclassificationsReclassificationsReclassificationsReclassifications AdjustmentsAdjustmentsAdjustmentsAdjustments

((((Restated)Restated)Restated)Restated) 31 December31 December31 December31 December

2010201020102010 Current liabilitiesCurrent liabilitiesCurrent liabilitiesCurrent liabilities 604.444.995604.444.995604.444.995604.444.995 (3.096.310)(3.096.310)(3.096.310)(3.096.310) (120.049.736)(120.049.736)(120.049.736)(120.049.736) 481.298.949481.298.949481.298.949481.298.949

Financial liabilities 104.040.496 - - 104.040.496

Trade receivables 90.503.597 - 44.458.192 134.961.789

Other receivables 13.824.015 (3.096.310) - 10.727.705 Liabilities for construction contracts 2.336.400 - (2.336.400) -

Government grants 7.883.289 - (4.789.933) 3.093.356

Provision for debt 39.770.740 - 6.312.777 46.083.517 Provision for employment benefits 9.459.381 - - 9.459.381

Order advances received 335.975.186 - (163.694.372) 172.280.814

Other current liabilities 651.891 - - 651.891

NonNonNonNon----current liabilitiescurrent liabilitiescurrent liabilitiescurrent liabilities 1.307.436.8541.307.436.8541.307.436.8541.307.436.854 (99.442.248)(99.442.248)(99.442.248)(99.442.248) (301.765.936)(301.765.936)(301.765.936)(301.765.936) 906.228.670906.228.670906.228.670906.228.670

Financial liabilities 39.860.947 - - 39.860.947

Trade receivables 2.164.300 48.512.180 (15.788.170) 34.888.310

Other receivables 5.000 - - 5.000 Liabilities for construction contracts 7.009.200 - (7.009.200) -

Provisions 57.556.280 (48.512.180) - 9.044.100 Provision for employee benefits 63.377.093 - - 63.377.093

Deferred tax liability 99.442.248 (99.442.248) - -

Order advances received 1.038.021.786 - (278.968.566) 759.053.220 EQUITYEQUITYEQUITYEQUITY 844.037.006844.037.006844.037.006844.037.006 ---- 41.240.14841.240.14841.240.14841.240.148 885.277.154885.277.154885.277.154885.277.154 Shareholder’s Equity Shareholder’s Equity Shareholder’s Equity Shareholder’s Equity Attributable to Equity Attributable to Equity Attributable to Equity Attributable to Equity Holders of the ParentHolders of the ParentHolders of the ParentHolders of the Parent 844.145.130844.145.130844.145.130844.145.130 ---- 40.900.28840.900.28840.900.28840.900.288 885.045.418885.045.418885.045.418885.045.418

Share capital 235.224.000 - - 235.224.000 Adjustment of share capital 132.773.042 - - 132.773.042

Other funds 900.274 - (900.274) -

Restricted profit reserves 29.813.447 - - 29.813.447

Retained earnings 204.714.396 - 55.640.044 260.354.440 Net profit/(loss) for the period 240.719.971 - (13.839.482) 226.880.489

Minority sharesMinority sharesMinority sharesMinority shares (108.124)(108.124)(108.124)(108.124) ---- 339.860339.860339.860339.860 231.736231.736231.736231.736 TOTAL LIABILITIES TOTAL LIABILITIES TOTAL LIABILITIES TOTAL LIABILITIES AND EQUITYAND EQUITYAND EQUITYAND EQUITY 2.755.918.8552.755.918.8552.755.918.8552.755.918.855 (102.538.558)(102.538.558)(102.538.558)(102.538.558) (380.575.524)(380.575.524)(380.575.524)(380.575.524) 2.272.804.7732.272.804.7732.272.804.7732.272.804.773


Previously Previously Previously Previously reportedreportedreportedreported

1 January 1 January 1 January 1 January –––– 31 December31 December31 December31 December

2010201020102010 ReclassificationsReclassificationsReclassificationsReclassifications AdjustmentsAdjustmentsAdjustmentsAdjustments

RestatedRestatedRestatedRestated 1 January 1 January 1 January 1 January ––––

31 December31 December31 December31 December 2010201020102010

OPERATING INCOMEOPERATING INCOMEOPERATING INCOMEOPERATING INCOME Revenue 1.189.786.590 - 22.612.203 1.212.398.793

Cost of sales (-) (814.455.985) (7.533.264) (82.851.329) (904.840.578)

GROSS PROFITGROSS PROFITGROSS PROFITGROSS PROFIT 375.330.605375.330.605375.330.605375.330.605 (7.533.264)(7.533.264)(7.533.264)(7.533.264) (60.239.126)(60.239.126)(60.239.126)(60.239.126) 307.558.215307.558.215307.558.215307.558.215 Marketing, sales and distribution expenses (-) (26.847.427) 3.291.173 - (23.556.254) General administrative expenses (-) (72.124.806) - - (72.124.806) R&Dexpenses (-) (33.132.162) - - (33.132.162) Other operating income 12.787.453 - (7.289.382) 5.498.071 Other operating expenses (-) (41.392.693) 4.242.091 35.475.646 (1.674.956)

OPERATING PROFITOPERATING PROFITOPERATING PROFITOPERATING PROFIT 214.620.970214.620.970214.620.970214.620.970 ---- (32.052.862)(32.052.862)(32.052.862)(32.052.862) 182.568.108182.568.108182.568.108182.568.108

Non-operating income 284.426.650 - (523.573) 283.903.077 Non-operating financial expenses (-) (269.740.658) - 1.994.211 (267.746.447)

PROFIT BEFORE TAXATIONPROFIT BEFORE TAXATIONPROFIT BEFORE TAXATIONPROFIT BEFORE TAXATION 229.306.962229.306.962229.306.962229.306.962 ---- (30.582.224)(30.582.224)(30.582.224)(30.582.224) 198.724.738198.724.738198.724.738198.724.738 Tax incomeTax incomeTax incomeTax income 11.631.53811.631.53811.631.53811.631.538 ---- 16.311.67916.311.67916.311.67916.311.679 27.943.21727.943.21727.943.21727.943.217

- Current tax expense - - - -

- Deferred tax income 11.631.538 - 16.311.679 27.943.217

PROFIT FOR THE PERIODPROFIT FOR THE PERIODPROFIT FOR THE PERIODPROFIT FOR THE PERIOD 240.938.500240.938.500240.938.500240.938.500 ---- (14.270.545)(14.270.545)(14.270.545)(14.270.545) 226.667.955226.667.955226.667.955226.667.955

Distribution of total Distribution of total Distribution of total Distribution of total comprehensive profitcomprehensive profitcomprehensive profitcomprehensive profit

Non-controlling interest 218.529 - (431.063) (212.534)

Owners of the company 240.719.971 - (13.839.482) 226.880.489

Earnings per 100 sharesEarnings per 100 sharesEarnings per 100 sharesEarnings per 100 shares 1,02 - (0,06) 0,96


ASELSAN A.Ş. ASELSAN A.Ş. ASELSAN A.Ş. ASELSAN A.Ş. ANNUAL REPORT OF THE BOARD OF DIRECTORS FOR THE PERIOD ANNUAL REPORT OF THE BOARD OF DIRECTORS FOR THE PERIOD ANNUAL REPORT OF THE BOARD OF DIRECTORS FOR THE PERIOD ANNUAL REPORT OF THE BOARD OF DIRECTORS FOR THE PERIOD OFOFOFOF 1 JANUARY1 JANUARY1 JANUARY1 JANUARY----31 DECEMBER 2011 31 DECEMBER 2011 31 DECEMBER 2011 31 DECEMBER 2011 1. 1. 1. 1. Report period, company title, names Report period, company title, names Report period, company title, names Report period, company title, names and surnames of the chairmenand surnames of the chairmenand surnames of the chairmenand surnames of the chairmen and members and members and members and members of the boards of directors and auditors as well as of tof the boards of directors and auditors as well as of tof the boards of directors and auditors as well as of tof the boards of directors and auditors as well as of the executivehe executivehe executivehe executive directors who directors who directors who directors who served within the period; limits of their authority; and the periods of service (with served within the period; limits of their authority; and the periods of service (with served within the period; limits of their authority; and the periods of service (with served within the period; limits of their authority; and the periods of service (with starting and ending dates)starting and ending dates)starting and ending dates)starting and ending dates):::: Members of the Board of Directors and AuditorsMembers of the Board of Directors and AuditorsMembers of the Board of Directors and AuditorsMembers of the Board of Directors and Auditors:::: Information about the members of the Board of Directors and the Board of Auditors, who were – according to the provisions of the Articles of Association of the Company – elected by the General Assembly among the owners of Group-A preferred stocks or the candidates who were nominated by them, for a period of three years are as follows.

Members of the Board of DirectorsMembers of the Board of DirectorsMembers of the Board of DirectorsMembers of the Board of Directors

Name SurnameName SurnameName SurnameName Surname DutyDutyDutyDutyDate of the General Date of the General Date of the General Date of the General Assembly at which Assembly at which Assembly at which Assembly at which he/she was electedhe/she was electedhe/she was electedhe/she was elected

Date of Date of Date of Date of Duty EndDuty EndDuty EndDuty End

Hasan MEMİŞOĞLU Chairman/Executive Director March 2011 March 2014

Necmettin BAYKUL Vice Chairman/Executive Director

March 2010 March 2013

Birol ERDEM Member March 2010 March 2013

Ahmet ŞENOL Member March 2010 March 2013

Erhan AKPORAY Member March 2011 March 2014

M.Ayhan GERÇEKER Member March 2010 March 2013

Osman Kapani AKTAŞ

Member March 2010 March 2013

Members of the Board of AuditorsMembers of the Board of AuditorsMembers of the Board of AuditorsMembers of the Board of Auditors

Name SurnameName SurnameName SurnameName Surname DutyDutyDutyDuty Date of the GeneraDate of the GeneraDate of the GeneraDate of the General l l l Assembly at which Assembly at which Assembly at which Assembly at which he/she was ehe/she was ehe/she was ehe/she was eleclecleclectedtedtedted

Date of Date of Date of Date of Duty EndDuty EndDuty EndDuty End

Mehmet TİMUR Member of the Board of Auditors


İsmail DİKMEN Member of the Board of Auditors


Ali Rıza DADAŞ Member of the Board of Auditors


Members of the Board of Directors have powers that are stated in Turkish Commercial Code (TCC) and in Article 13 of the Articles of Association of the Company.

Members of the Board of Auditors have powers that are stated in TCC and in Article 17 of the Articles of Association of the Company.


Changes of Members of the Board of Directors and Auditors in the period of 1 January – 31 December 2011:

In the General Assembly dated 31 March 2011, Hasan MEMİŞOĞLU was elected in the scope of TCC Law no.315 to replace Mehmet ÇAVDAROĞLU. Erhan AKPORAY was elected as Member of Board of Directors for 3 years to replace Aslan KILIÇASLAN and Ali Rıza DADAŞ was elected as Member of Board of Auditors for 3 years to replace Atilla GÜLER, whose duty terms are expired.

2. 2. 2. 2. Main factors that affect the enterprise’s performance; significant changes in the Main factors that affect the enterprise’s performance; significant changes in the Main factors that affect the enterprise’s performance; significant changes in the Main factors that affect the enterprise’s performance; significant changes in the environment in which the enterprise operates; the policies the enterprise shall environment in which the enterprise operates; the policies the enterprise shall environment in which the enterprise operates; the policies the enterprise shall environment in which the enterprise operates; the policies the enterprise shall pursue against these changes;pursue against these changes;pursue against these changes;pursue against these changes; investments and dividends policies undertaken by investments and dividends policies undertaken by investments and dividends policies undertaken by investments and dividends policies undertaken by the enterprise in order to strengthen its performancethe enterprise in order to strengthen its performancethe enterprise in order to strengthen its performancethe enterprise in order to strengthen its performance::::

The Company operates in the field of defense industry. Global tendencies as well as the domestic dynamics affect the defense expenditure of Turkey. Even though her defense expenses vary in time, Turkey has, especially in the recent years, been one of the significant countries in defense equipment purchases. From the year 2000 and onwards, Turkey appropriated one third of the defense budget for the purchase and modernization of defense equipment programs.

When deciding for the amounts of dividends, the company’s equity capital ratio, sustainable growth rate, market value and cash flows are taken into consideration and; the profit distribution proposal prepared according to these is submitted for the approval in the General Assembly. There are no cumulative preferred shares in the company.

3. 3. 3. 3. Financial resources and the risk management poFinancial resources and the risk management poFinancial resources and the risk management poFinancial resources and the risk management policies of the enterpriselicies of the enterpriselicies of the enterpriselicies of the enterprise::::

a.a.a.a. FinancingFinancingFinancingFinancing RRRResourcesesourcesesourcesesources::::

The major financial resource of the Company consists of advance received/interim proceeds received due to the signed contracts and the accumulated earnings (self-financing). In 2011, cash requirements have been met from the existing cash resources or the cash flows. In the third quarter of 2011, for the equipment necessity of “Radar Technology Center” is planned to be established in Gölbaşı, USD 40 Million loan is obtained from Defense Industry Support Fund with 5 years maturity and no principal payment for first 3 years.

As of 28 November 2011, within the scope of Eximbank Loan Program, USD 6.8 M Pre-Shipment Discount Loan is obtained with 120 days maturity.

b. b. b. b. Risk MRisk MRisk MRisk Managementanagementanagementanagement::::

Financial Risk and Management PFinancial Risk and Management PFinancial Risk and Management PFinancial Risk and Management Policyolicyolicyolicy

In implementing a financial risk management model for the Company, “Management of Assets-Liabilities” was undertaken as the basis and foreign currency, interest rate and liquidity risks were identified as the major financial risks.

For the management of the financial risks of the balance sheet, foreign currency, interest rate and liquidity risks, which can have an impact on the assets and liabilities of the Company are defined, measured, monitored and reported. Therefore the negative effects of the fluctuations in financial markets on the financial performance of the Company have been minimized. Derivative financial instruments are also used to reduce risks to minimum levels.


Off-balance sheet financial risks originate from the different currencies of cash inflows and outflows that are associated with the projects and the deviations from the planned cash flow dates. In order to monitor off-balance sheet financial risk management, financial risk management techniques are used in order to maintain the expected profitability of the projects.

Financial risk management is also applied by subsidiaries and affiliates within the framework of risk management policies and procedures approved by their own management.

(1)(1)(1)(1) Foreign Currency Risk and Management PForeign Currency Risk and Management PForeign Currency Risk and Management PForeign Currency Risk and Management Policyolicyolicyolicy

The basic principal in foreign currency management is to minimize the effects of exchange rate fluctuations without having a deficit or surplus in the foreign currency position.

In order to measure the foreign currency risk exposure of the Group, foreign currency positions are monitored at regular intervals; foreign currency gains and losses that would arise from the fluctuations in the exchange rates and the possible effects of currency exposure are computed and analyzed. Foreign currency risk arising from the foreign currency position is hedged with derivative instruments by considering the cost and benefits of hedging the risk exposure. Within this context, foreign currency positions of the Group for the upcoming financial periods are estimated by considering possible changes that may occur in assets and liabilities, which are sensitive to foreign currency rates. The applicable derivative instruments and transaction volumes that can be used are determined after making estimates for the foreign currency position, by taking the existing market conditions and the expectations into consideration. To hedge the currency risk exposure, a currency buy option transaction is entered into if there is an open foreign currency position, and a currency sell option is entered into if there is a long position.

(2)(2)(2)(2) Interest Risk and Management PInterest Risk and Management PInterest Risk and Management PInterest Risk and Management Policyolicyolicyolicy

In determining the interest rate risk, “gap analysis” is performed to monitor the difference between interest rate sensitive financial assets and financial liabilities. For those purposes, the Company uses a balance sheet maturity table. The Company is not exposed to any major risk arising from interest rate sensitive financial liabilities as the Company does not have any major indebtedness arising from credit relationship entered with any financial institution counterparty. As part of its fund management policy, the interest risk of interest bearing assets is calculated by performing sensitivity analysis. The sensitivity of interest sensitive assets in response to changes in market interest rates is computed based on the average maturities and average interest sensitive assets; the interest rate risk arising from the securities portfolio held as part of fund management function is monitored within expectations of market rates by watching the financial markets closely.

(3)(3)(3)(3) Liquidity Risk and Management PLiquidity Risk and Management PLiquidity Risk and Management PLiquidity Risk and Management Policyolicyolicyolicy

Liquidity risk covers the risk of not having financing resources available to fund liabilities that are due, not having available funds to support potential increase in assets and the transactions conducted in illiquid markets.

Liquidity risk is managed by determining the cash portfolio term structure by taking into account any short-term liabilities, high liquidity assets, expected cash flows and the


balance sheet maturity ladder. In this context, the Group manages the funding liquidity requirements by maintaining sufficient levels of cash and cash equivalent assets, giving particular attention to financing Group activities without demanding any bank loans and maintaining sources of funding varied by keeping credit limits available to fund unexpected cash requirements

CCCCapital Risk Mapital Risk Mapital Risk Mapital Risk Managementanagementanagementanagement

For the capital risk management purposes, debt-equity ratios are taken into consideration for reducing financial risks and costs to minimum levels. The aim of the Company is to assure regular dividend income for its shareholders and provide a stable growth of the Company through funds generated by the Company’s activities. The company aims to maintain a balanced capital structure by cash and/or share capital based on dividend payments and new share issue.

4. 4. 4. 4. Matters that do not take place in the financial stateMatters that do not take place in the financial stateMatters that do not take place in the financial stateMatters that do not take place in the financial statements but which would be ments but which would be ments but which would be ments but which would be helpfulhelpfulhelpfulhelpful forforforfor the usersthe usersthe usersthe users::::

As of 31 December 2011, the company has USD 4.3 Billion long term orders for the period of 2012 – 2018.

5. 5. 5. 5. Important events that did occur starting from the tImportant events that did occur starting from the tImportant events that did occur starting from the tImportant events that did occur starting from the time the accounting period 01 ime the accounting period 01 ime the accounting period 01 ime the accounting period 01 JanuaJanuaJanuaJanuary 2011ry 2011ry 2011ry 2011––––31 December 201131 December 201131 December 201131 December 2011 has ended until the date of the general assembly at has ended until the date of the general assembly at has ended until the date of the general assembly at has ended until the date of the general assembly at which the related financial statements would be discussedwhich the related financial statements would be discussedwhich the related financial statements would be discussedwhich the related financial statements would be discussed::::

a) The contract worth EUR 1,465,530 is signed by the Company and Selex-Galileo due to the requirement of Italian Armed Forces for the sales of Electro-Optical unit. The delivery will be carried out between 2012 and 2013.

b) A contract is signed by the Company and Kapsch Telenmatic Services Sp. Z o.o. for the purpose of operator fee collection system design, production and delivery in Poland. Period of the contract is 7 years. The Company received the first order amounted PLN 24.200.000 (EUR 5.400.000) regarding 51 unit of Automatic Switching System and Operator Paying Office.

c) The Company received an order of 10 units of Thermal Camera attached to the submarine periscope from the firm Carl Zeiss Opronics. The delivery will be carried out between 2012 and 2018.

d) The Company received an order of Air Radios from Raytheon Network Centric Systems amounted USD 1.154.125. The delivery will be carried out in 2012.

e) The contract worth USD 49.700.000 and TL 14.352.000 is signed by the Company and the Undersecretariat for Defense Industries for the Project of Composite Helmet of the Armored Vehicle Crew. The delivery will be carried out between 2012 and 2016.

f) The contract worth EUR 95.500.344 (excluding VAT) is signed by the Company and HDW/MFI Business Partnership for the New Type Submarine Project in 17 January 2012. The delivery will be carried out between 2015 and 2023.

g) The Company is interested in the purchase of 10 percent share of Roketsan Roket Sanayi ve Ticaret A.Ş. which worth of TL 14,6 Million due to the valuation of Vakıflar Bankası


h) The Company received an order of Remote Controlled Stabilized Platform to integrate with Coast Guard Boat of a foreign customer amounted EUR 5.968.900. The delivery will be carried out between 2012 and 2013.

i) A contract worth USD 56.217.878 (excluding VAT) is signed by the Company and a foreign firm in 18 February 2012. The delivery will be carried out between 2012 and 2015.

j) The contract worth USD 17.085.828 is signed by the Company and Turkish Aerospace Industries Inc. (TAI) in 6 March 2012 for the Development of Operation Computer and the Avionics Equipment Supply. Project period is 46 months.

6. 6. 6. 6. Predictions about the development of the Predictions about the development of the Predictions about the development of the Predictions about the development of the companycompanycompanycompany::::The vision of the company is to become “one of the largest fifty defense industry firms in the world”. A five-year strategic plan is being prepared in accordance with this vision. All activities are carried out in order to attain the set objectives in compliance with the strategic plan. The company will continue to produce technologies in line with these set objectives by making use of its qualified human resources which is the bases of productivity, the developed processes, its Research and Development (R&D) resources, and its infrastructure and organization that match the level of the worldwide companies.

The Company has been included for the last five years in the list of the most prestigious defense industry – the “Defense News Top 100”, which is published annually by the “Defense News” magazine and The Company aims to continue to climb up the list in the coming years by raising its revenue up to USD 1 Billion.

7. 7. 7. 7. Report on compliance with corporate management principlesReport on compliance with corporate management principlesReport on compliance with corporate management principlesReport on compliance with corporate management principles::::

Presented as an annex to this document.

8. 8. 8. 8. R&DR&DR&DR&D activities which were carried outactivities which were carried outactivities which were carried outactivities which were carried out::::Starting from the day it had been founded as the leading defense industry establishment which develops high technology solutions for land, air, sea and space platforms, The Company has been deeply committed to R&D activities and technological achievements. It aims to spend an average of 7% of its annual revenues on the R&D activities, which it would support by using its own equity capital. All technological developments in the products/systems for land, sea, air and space platforms in the field of the activities are followed up and; the design, development and production of advanced technology products/systems are taken as the basis to acquire a system that not only uses the technology, but also transfers/sells the technologies that it develops to the other firms it cooperates with. Emphasis is given to basic/applied research, technology development and creativity activities. Opportunities of cooperation in these fields with national and international establishments are used.

Maximum level of effort is exerted to use the technological facilities within our country, in order to increase the share of the national contribution to the projects. For this purpose, the Company gives importance to cooperation with the universities, R&D establishments, and the use of domestic subcontractors and sub-industries.

R&D expenditure deduction is applicable on the projects conducted by the Company in accordance with provisions of Corporation Tax Law No. 5520 and The Support of R&D Activities Law No: 5746. For the R&D projects which are not conducted for the public sector, approval and support of the Technology and Innovation Support Program


Presidency’s (TEYDEB) is obtained. There are four R&D centers within the Company which are Defense Systems Technologies (SST), Radar, Electronic Warfare and Intelligence Systems (REHİS), Microelectronic, Guidance and Electro-Optical (MGEO), Information Technologies (HBT) Department. In the R&D centers, 1.904 research engineers are employed providing their services.

The Company also operates in Teknopark located in Middle East Technical University due to the Law No.4691 on TechnologyDevelopment Zones. In this region, 154 research and support personnel are employed.

9. 9. 9. 9. Amendments made to the Articles of Association withinAmendments made to the Articles of Association withinAmendments made to the Articles of Association withinAmendments made to the Articles of Association within the (accounting) the (accounting) the (accounting) the (accounting) period period period period and the reason for themand the reason for themand the reason for themand the reason for them::::

The articles of association was not changed during the period.

10. 10. 10. 10. The nature and the amount of the capital market instruments that were issued The nature and the amount of the capital market instruments that were issued The nature and the amount of the capital market instruments that were issued The nature and the amount of the capital market instruments that were issued –––– if anyif anyif anyif any::::

There are no capital market instruments for the period of 1 January – 31 December 2011.

11. 11. 11. 11. The sector in which the The sector in which the The sector in which the The sector in which the companycompanycompanycompany operates and its position within that sectoroperates and its position within that sectoroperates and its position within that sectoroperates and its position within that sector::::

The Company is the leader industrial establishment which develops high technology system solutions for land, air, sea and space platforms.

The Company, which is an establishment of the Turkish Armed Forces Foundation, is the technological center of Turkey in the fields of design, manufacture, system integration, modernization and after sale services of military and civilian communication systems; avionics systems; electronic warfare and intelligence systems; radar systems; command control systems; naval warfare systems; electro-optical systems and products.

The Company rose to the 80th position in the “Defense News Top 100” list in the year 2010 (86rd in the year 2009). In addition Aselsan is 94th in the “SIPRI Top 100” List in which the Company is the first Turkish firm that has taken place. The Company is 45th in ISO 500 from-production-to-sale list (40th in the year 2009) and 39th in the category of privately owned companies (35th in the year 2009). Also, the Company is 62th of “Fortune 500 Turkey” list (49th in the year 2009) and 75th of “Capital 500 Turkey” list (67th in the year 2009).

The Company is ranked as first in the research conducted by Deloitte named “Deloitte Technology Fast 50 Turkey – Big Stars” in 2011, and 2010.

12. 12. 12. 12. Developments in the investments, benefiting from incentives, and if benefitted, Developments in the investments, benefiting from incentives, and if benefitted, Developments in the investments, benefiting from incentives, and if benefitted, Developments in the investments, benefiting from incentives, and if benefitted, the scope of such benefitthe scope of such benefitthe scope of such benefitthe scope of such benefit::::

Developments in investDevelopments in investDevelopments in investDevelopments in investments:ments:ments:ments: It is advised to have the resources of The Company directed to the fields with higher added value and to more profitable areas by taking into consideration the worldwide trends, technological developments and the current and future needs of the customers – first and foremost of the Turkish Armed Forces. Investments in The Company are made by taking the requirements of technological plans, strategic plans as well as the projects into consideration.

Benefitting from incentives:Benefitting from incentives:Benefitting from incentives:Benefitting from incentives:Within the scope of 1501- Industrial R&D Projects Support Program, the Company benefitted from incentives provided by Scientific and Technological Research Council of Turkey (TÜBİTAK), for the projects which have been deemed eligible for incentives and thus were supported.... There are 88 Project


Applications to TÜBİTAK and relevant projects have benefitted from incentives. 1007 “Public Corporations R&D Projects Support Program” is established to satisfy the needs, resolve the problems due to R&D and support the projects of Public Corporations.

There are two R&D projects within the scope of this program that are completed and four R&D projects that are continuing.

The integration project, signed within the scope of the 7 th Framework Programs of the European Union, has started from the date of 01 June 2008. One project is approved and started its operations in the scope of this program. Besides, four projects incentive applications were accepted and started its operations in 2010 and 2011 within the scope of the 7th Framework Programs of the European Union, under the “Circulation of Researchers, Return Gifts; Special Program for Supporting Individuals”.

Two more projects were started to be supported in the scope of EUREKA International R&D Projects Support Program in July, 2010. At the end of 2010 a project about border security was accepted by IPA (A Support Program before Joining to EU).

Two projects are supported by the SAN-TEZ R&D Support Program started its operations in March 2011, which was founded to support postgraduate and doctoral thesis to make the cooperation of the universities and industry institutional.

Travel expenses for foreign market research and expenses of the foreign country offices are covered by the Government Grant for Exports.

13. 13. 13. 13. Qualities of the production units of the enterprise; capacity usage ratios and Qualities of the production units of the enterprise; capacity usage ratios and Qualities of the production units of the enterprise; capacity usage ratios and Qualities of the production units of the enterprise; capacity usage ratios and their development; general capacity usage ratio; developments in the production of their development; general capacity usage ratio; developments in the production of their development; general capacity usage ratio; developments in the production of their development; general capacity usage ratio; developments in the production of the goods and services of the field of activity; explanations that contain the goods and services of the field of activity; explanations that contain the goods and services of the field of activity; explanations that contain the goods and services of the field of activity; explanations that contain compacompacompacomparisons of the quantities, quality, circulation and prices with risons of the quantities, quality, circulation and prices with risons of the quantities, quality, circulation and prices with risons of the quantities, quality, circulation and prices with the figures of the the figures of the the figures of the the figures of the past periods:past periods:past periods:past periods:

In the year 2011, the capacity usage ratio has been at the level of 95%.Large part of the production is based on the orders that have been placed. R&D activities are being carried out for the products that are designed according to the needs of the customers. The systems and the product qualities, quantities and prices do vary. With the use of Corporate Resource Planning (ERP) system, production processes are effectively managed.

14. 14. 14. 14. Prices, sales proceeds and sale conditions of the goods and services in the field Prices, sales proceeds and sale conditions of the goods and services in the field Prices, sales proceeds and sale conditions of the goods and services in the field Prices, sales proceeds and sale conditions of the goods and services in the field of activity as well as the improvements shown in these matters within the year; of activity as well as the improvements shown in these matters within the year; of activity as well as the improvements shown in these matters within the year; of activity as well as the improvements shown in these matters within the year; developments in yield and productividevelopments in yield and productividevelopments in yield and productividevelopments in yield and productivity coefficients, and the reasons for significant ty coefficients, and the reasons for significant ty coefficients, and the reasons for significant ty coefficients, and the reasons for significant changes changes changes changes in comparison with past yearsin comparison with past yearsin comparison with past yearsin comparison with past years::::

The Company carries out its operations in these basic fields of activities: “Communications and Information Technologies”, “Defense System Technologies”, “Radar, Electronic Warfare and Intelligence Systems” and “Microelectronic Guidance and Electro-Optic.” According to the terms and conditions of the related sales contract, income from projects include, production based on the orders, mass production product sales, sales with services, commodities and progress payment contracts. Sales conditions vary in each particular contract.

TL 1.419,4 million worth of the total sales that The Company have generated in the period 01 January-31 December, 2011 were domestic sales, whereas TL 82,5 million worth of these sales were foreign sales.


15. 15. 15. 15. The basic ratios regarding the financial status, productivity and solvency, as The basic ratios regarding the financial status, productivity and solvency, as The basic ratios regarding the financial status, productivity and solvency, as The basic ratios regarding the financial status, productivity and solvency, as calculated on the basis of the financial statements and information that hascalculated on the basis of the financial statements and information that hascalculated on the basis of the financial statements and information that hascalculated on the basis of the financial statements and information that has been been been been prepared according to the provisions in the Capital Markets Boardprepared according to the provisions in the Capital Markets Boardprepared according to the provisions in the Capital Markets Boardprepared according to the provisions in the Capital Markets Board Communiqué Communiqué Communiqué Communiqué Series:XI and No:29Series:XI and No:29Series:XI and No:29Series:XI and No:29::::

BASIC RATIOS / CONSOLIDATEDBASIC RATIOS / CONSOLIDATEDBASIC RATIOS / CONSOLIDATEDBASIC RATIOS / CONSOLIDATED 31.12.2031.12.2031.12.2031.12.2011111111 31.12.2031.12.2031.12.2031.12.2010101010

Current Ratio (Current Assets/Current Liabilities) 3,25 3,04

Liquidity Ratio (Current Assets-Inventories/Current Liabilities)

1,12 1,54

Equity /Total Liabilities 0,43 0,39

Short Term Liabilities/Total Liabilities 0,18 0,21

Long Term Liabilities/Total Liabilities 0,40 0,40

Operating Profit/Sales Revenues 0,16 0,15

Profit for the Period (Parent Company Shares) / Sales Revenue

0,11 0,19

16. 16. 16. 16. Measures that are considered in order to improve the financial structure oMeasures that are considered in order to improve the financial structure oMeasures that are considered in order to improve the financial structure oMeasures that are considered in order to improve the financial structure of the f the f the f the enterpriseenterpriseenterpriseenterprise::::

In the annual budgets and practices of the company, for the period of 2011-2013, the following principles are taken as the basis: Economizing when making all kinds of expenses; close follow up of advance payments and claims; paying attention to maturity dates and currency accord as well as to the risk status of the domestic and foreign vendors in the purchase and sales agreements that would be made.


17. 17. 17. 17. Changes in the upper management, name, surname and backgrounds of those Changes in the upper management, name, surname and backgrounds of those Changes in the upper management, name, surname and backgrounds of those Changes in the upper management, name, surname and backgrounds of those who are currently in dutywho are currently in dutywho are currently in dutywho are currently in duty::::

The table on which the information on the changes made within the period of 1 January – 31 December 2011 in top management and on those who are currently in office is as follows:

Name - SurnameName - SurnameName - SurnameName - Surname PositionPositionPositionPositionDate ofDate ofDate ofDate of

AppointmentAppointmentAppointmentAppointment

1 Hasan MEMİŞOĞLUChairman of the Board of Directors/Executive Director

01.01.2011

2 Necmettin BAYKULVice Chairman of the Board of Directors /Executive Director

01.04.2010

3 Ahmet ŞENOLMember of the Board of Directors

01.04.2007

4 Erhan AKPORAYMember of the Board of Directors

01.04.2011

5 Mustafa Ayhan GERÇEKERMember of the Board of Directors

01.04.2007

6 Birol ERDEMMember of the Board of Directors

01.04.2010

7 Osman Kapani AKTAŞMember of the Board of Directors

01.04.2010

8 İsmail DİKMENMember of the Board of Auditors

01.04.2010

9 Ali Rıza DADAŞMember of the Board of Auditors

01.04.2011

10 Mehmet TİMURMember of the Board of Auditors

02.04.2001

11 Cengiz ERGENEMAN CEO 04.01.200612 Fuat AKÇAYÖZ Vice President 01.02.2006

13 Ergun BORA Vice President 01.01.2008

14 Özcan KAHRAMANGİL Vice President 05.01.2006

15 Faik EKEN Vice President 21.01.2006

16 Ahmet DEMİR Vice President 01.02.2005

Name - SurnameName - SurnameName - SurnameName - Surname PositionPositionPositionPositionDate ofDate ofDate ofDate of

AppointmentAppointmentAppointmentAppointment

1 Mehmet ÇAVDAROĞLUChairman of the Board of Directors/Executive Director

31.12.2010

2 Aslan KILIÇASLANMember of the Board of Directors

30.03.2011

3 Atilla GÜLERMember of the Board of Auditors

30.03.2011

LIST OF TOP DIRECTORS WHO SERVE AT ASELSAN A.Ş. LIST OF TOP DIRECTORS WHO SERVE AT ASELSAN A.Ş. LIST OF TOP DIRECTORS WHO SERVE AT ASELSAN A.Ş. LIST OF TOP DIRECTORS WHO SERVE AT ASELSAN A.Ş.

LIST OF ASELSAN A.Ş. TOP DIRECTORS WHO RESIGNEDLIST OF ASELSAN A.Ş. TOP DIRECTORS WHO RESIGNEDLIST OF ASELSAN A.Ş. TOP DIRECTORS WHO RESIGNEDLIST OF ASELSAN A.Ş. TOP DIRECTORS WHO RESIGNED


18. 18. 18. 18. Personnel and labor movements, collective bargaining practices, rights and Personnel and labor movements, collective bargaining practices, rights and Personnel and labor movements, collective bargaining practices, rights and Personnel and labor movements, collective bargaining practices, rights and benefits tbenefits tbenefits tbenefits that are granted that are granted that are granted that are granted to the personnel and the workerso the personnel and the workerso the personnel and the workerso the personnel and the workers::::

The number of personnel, including candidate engineers, temporary personnel, the disabled and terror victims, who have been hired in the year 2011, is 431; the number of personnel who quit is 169 persons. There is no collective bargaining agreement in the Company.

The rights and benefits that the company offers to the personnel are bonuses, meals allowance, marriage allowance, childbirth allowance, funeral benefits, transportation, private health insurance, and kindergarden and childcare facilities

19. 19. 19. 19. Information on the donationInformation on the donationInformation on the donationInformation on the donations that ares that ares that ares that are mademademademade iiiin year 2011n year 2011n year 2011n year 2011::::

Information on the donations that are made within the year 2011 is presented in the following table:

ESTABLISHMENTESTABLISHMENTESTABLISHMENTESTABLISHMENT TOTAL TOTAL TOTAL TOTAL AMOAMOAMOAMOUNTUNTUNTUNT EXPLANATIONEXPLANATIONEXPLANATIONEXPLANATION

Beynam Primary School 3.433 TL Construction of Atatürk Section

İTÜ Foundation 10.000 TL Support to competition

TAF Rehabilitation and Nursing Center

21.004 TL Contribution in kind

TOTALTOTALTOTALTOTAL 34.34.34.34.437 TL437 TL437 TL437 TL

20. 20. 20. 20. Information as to if there are any provincial organizationsInformation as to if there are any provincial organizationsInformation as to if there are any provincial organizationsInformation as to if there are any provincial organizations::::

- Branch in Pretoria, Republic of South Africa - Branch in Abu Dhabi, United Arab Emirates

21. 21. 21. 21. Information on the Information on the Information on the Information on the affiliates and subsidiaries affiliates and subsidiaries affiliates and subsidiaries affiliates and subsidiaries that are that are that are that are subject to consolidation in subject to consolidation in subject to consolidation in subject to consolidation in the the the the maimaimaimain company (mutual affiliation)n company (mutual affiliation)n company (mutual affiliation)n company (mutual affiliation)::::

The main field of activities and the company ownership percentage in the affiliates subject to consolidation is as follows:

Company Name

Field of Activity

Percentage of Shares (%)

Mikes Mikrodalga Elektronik Sistemleri

Microwave research, development projects 96,36

AselsanNet Elk.ve Hab.Sis. San.Tic.İnş.ve Taah. Ltd .Şti.

All kinds of electrical, electronic, computer, information technology, communications, security and related areas.

95,00

Mikes and AselsanNet does not own any shares in the company.


22. 22. 22. 22. Explanations regarding thExplanations regarding thExplanations regarding thExplanations regarding the main elements of the internal and risk management e main elements of the internal and risk management e main elements of the internal and risk management e main elements of the internal and risk management systems of the group concerning the procedures for the preparation of the systems of the group concerning the procedures for the preparation of the systems of the group concerning the procedures for the preparation of the systems of the group concerning the procedures for the preparation of the cocococonsolidated financial statementsnsolidated financial statementsnsolidated financial statementsnsolidated financial statements::::

Controls in the company are performed by the Internal Audit and Assessment Committee, the Committee in Charge of Audits and the members of the Board of Auditors, in order to reduce the risk of material misstatements in the financial statements of the group. These organs perform their duties independently from one another and according to the common objectives and targets, by pursuing an internal control system which ensures the reliability of the financial reporting system as well as the required controls in matters such as the effectiveness of the activities and their lawfulness.


Attachment: Report on Compliance with Corporate Management PrinciplesAttachment: Report on Compliance with Corporate Management PrinciplesAttachment: Report on Compliance with Corporate Management PrinciplesAttachment: Report on Compliance with Corporate Management Principles

1. 1. 1. 1. Compliance with CorporaCompliance with CorporaCompliance with CorporaCompliance with Corporatetetete Governance Principles DGovernance Principles DGovernance Principles DGovernance Principles Declarationeclarationeclarationeclaration

Compliance Report for the period of activities between 01.01.2010–31.12.2011 as per the Corporate Governance Principles, which the Capital Markets Boards (CMB) had announced and which it required the companies to include in their activity reports is presented hereinafter.

Efforts to ensure compliance with the Corporate Management Principles – where it could not be achieved will – continue in the future, to the extent where that proves to be possible in the sector in which activities are performed.

SECTION I SECTION I SECTION I SECTION I ---- SHAREHOLDERSSHAREHOLDERSSHAREHOLDERSSHAREHOLDERS

2222. Relations with Shareholders UnitRelations with Shareholders UnitRelations with Shareholders UnitRelations with Shareholders UnitInformation on the Investors’ Relations and Affiliates Unit that had been set up to be in charge of relations of the company with its shareholders are presented herein below: Ahmet DEMİR (Vice President/Chief Financial Officer) Aykan ÜRETEN (Financing Director) Pınar ÇELEBİ (Treasury and Fund Management Manager) Bani Betül DİNÇER (Investors Relations and Affiliates Unit /Senior Specialist) Dilara AKÇAM (Investors Relations and Affiliates Unit / SpecialistContact Details Tel: (312) 592 12 42-43-45-70 e-mail: [email protected] Investors Relations and Affiliates Unit carries out the activities regarding correct, reliable and updated keeping of the records on shareholders as well as the exercise of their rights; coordination of public announcements about special cases; answering of shareholders’ written requests for information about the company, except for the undisclosed and secret information as well as the commercial secrets; ascertaining of holding of the General Assembly meeting in accordance with the current legislation, articles of associations and the other internal rules of the company, and keeping of the records of the casted votes and sending the results to the shareholders; considering and monitoring of legislation, all matters about public disclosures, including company’s disclosure policy; carrying out of the procedures about increase of capital, distribution of profit, and amendment of the articles of association as well as the dematerialization procedures by using Enlightening of the Public Platform of the CMB and; the Corporate Management Principles studies. Dematerialization of the physical share certificates of about 100 shareholders and the procedures about their receipt of dividends were carried out by the Investors Relations and Affiliates Unit in the year 2011.

3. 3. 3. 3. Exercise of Their Right to Information by the ShareholdersExercise of Their Right to Information by the ShareholdersExercise of Their Right to Information by the ShareholdersExercise of Their Right to Information by the Shareholders

In the year 2011, questions of about 200 shareholders, mainly on how they would claim the bonus shares and the dividends (thereof) that they hadn’t claimed within the set


time, and what procedures they should follow for the dematerialization of their share certificates have been orally answered. Special care has been taken to provide full and understandable answers to the shareholders who apply for information. Company's web site is effectively used for the announcement of the developments that would affect exercise of shareholding rights. Appointment of a private auditor has not been provided as an individual right in the articles of association of the company, and there has not been any request from the shareholders for the appointment of a private auditor, either.

4. 4. 4. 4. Information on General AssemblyInformation on General AssemblyInformation on General AssemblyInformation on General Assembly

The agenda and the invitation to the 36th Annual General Assembly Meeting of the company which was held on the date of 31.03.2011 to discuss the activities of the year 2011 have been announced in the Trade Registry Gazette of Turkey, on 07.03.2011, and published in two newspaper at the date of 09.03.2011 at national level in Turkey. The meeting was held with the participation of 11 shareholders, who owned 19.990.001.790 shares of the total number of 23.522.400.000 shares represent TL. 235.224.000 issued capital. Annual reports are made ready for the shareholders for examination latest by fifteen days before the general assembly date and; they are given to the shareholders who apply to participate to the general assembly and to those who demand them. Special care is given to shareholders’ right to ask questions in the general assembly meetings on matters that take place in the agenda. The questions that the shareholders ask at the meetings and their suggestions, as well as the answers that are given to them are entered in the minutes of the general assembly.

Within the scope of CMB Communiqué, Series: IV No: 56 and No: 57, the company will comply with the regulations of Corporate Governance procedures of CMB due to the significant operations. The Company will add this issue to its main contract and will submit for approval in Ordinary General Assembly in 2012.

5. 5. 5. 5. Voting Rights and MinoVoting Rights and MinoVoting Rights and MinoVoting Rights and Minority Rightsrity Rightsrity Rightsrity Rights Shareholders have no preferred voting rights in the company, and there are not any rules pertaining to cumulative voting, either. 6. 6. 6. 6. Dividend Distribution Policy and the Dividend Distribution Policy and the Dividend Distribution Policy and the Dividend Distribution Policy and the DateDateDateDate According to the Capital Markets Law and the other legislation as well as the provisions of the articles of association, and as per the resolutions of the general assembly, in the year 2011 TL 32.696.136 (TL 0,139 per 1 TL share, 13,9% gross over capital) and (net TL 27.791.715,60 per TL 0,11815 - 1TL share, 11,815 % over capital) of the profit for 2010 has been distributed to shareholders as cash dividend. There are no privileges granted to (certain) shareholders as to the entitlement to the profits that are obtained by the company. The dividend distribution policy that has been presented to shareholders’ information is as follows: DIVIDEND DISTRIBUTION POLICYDIVIDEND DISTRIBUTION POLICYDIVIDEND DISTRIBUTION POLICYDIVIDEND DISTRIBUTION POLICY The amount of dividends shall be calculated – by taking into consideration the pertinent legislation, the provisions of the articles of association, the equity capital ratio of the


company, the sustainable growth rate, market value and cash flows – as the distributable profit by referring to the annual profit that is indicated in the financial statements of the company, which had been prepared according to the laws and regulations (after subtracting therefrom the reserves that had to be set aside according to the law, tax, funds, financial liabilities and the losses from previous years). Then, the Board of Directors will prepare its recommendation on the way such dividends would be distributed, i.e. as cash on the set dates, or as bonus shares that represent the profit which would have been added to the capital, and submit it to the approval of the General Assembly. There are no privileges in the company regarding entitlement to the company’s profit.

7. 7. 7. 7. Transfer of SharesTransfer of SharesTransfer of SharesTransfer of Shares In defense industry in which the company operates, it is very important to identify the controlling shareholders who would have a voice in the company management. For that reason, transfer of Group-A registered shares which represent a part of the capital and that are not traded in İstanbul Stock Exchange is restricted as per the provision of the articles of association which reads as, “Group-A shares cannot be sold or transferred without the approval of the Board of Directors and; in the event all or some of them are sold and transferred to third persons without the approval of the Board of Directors, the Board can, without stating any cause, refrain from registering such sale (in the company books)”. SECTION II SECTION II SECTION II SECTION II –––– ENLIGHTENING OF THE PUBLIC AND TRANSPARENCYENLIGHTENING OF THE PUBLIC AND TRANSPARENCYENLIGHTENING OF THE PUBLIC AND TRANSPARENCYENLIGHTENING OF THE PUBLIC AND TRANSPARENCY 8. 8. 8. 8. Company’s Disclosure PolicyCompany’s Disclosure PolicyCompany’s Disclosure PolicyCompany’s Disclosure PolicyDisclosure policy, about which our shareholders were informed at the Ordinary General Assembly meeting of 30.03.2007, can be accessed on the company’s internet web site.9. 9. 9. 9. Explanations Regarding Special CasesExplanations Regarding Special CasesExplanations Regarding Special CasesExplanations Regarding Special Cases Explanations have, under the guidelines of the CMB, been made in the year 2011 for 25 special cases. CMB or İstanbul Stock Exchange did not request any explanations and/or additional explanations within the year. 10. 10. 10. 10. Company’s Internet Web Site and Its ContentCompany’s Internet Web Site and Its ContentCompany’s Internet Web Site and Its ContentCompany’s Internet Web Site and Its Content Arrangements have been made to enable access to the following information on the company’s web site (www.aselsan.com.tr).

Members of the Board of Directors/Auditors; Trade Registry information; Shareholding structure; Latest version of the articles of association; Preferred shares; Explanations regarding special cases; Annual reports; Corporate management compliance reports; Disclosure policies; Explanations and public offering circulars; General assembly meetings; Proxy voting form; Frequently asked questions;


Periodical financial statement and independent audit reports. In the news and announcements section of the main page of the company’s internet web site, explanations regarding special cases to İstanbul Stock Exchange as well as information on other matters that concern the investors take place.

11. 11. 11. 11. Disclosure of Real Person(s) Who is/are Ultimate Controlling ShareholdeDisclosure of Real Person(s) Who is/are Ultimate Controlling ShareholdeDisclosure of Real Person(s) Who is/are Ultimate Controlling ShareholdeDisclosure of Real Person(s) Who is/are Ultimate Controlling Shareholder(s) r(s) r(s) r(s) The Turkish Armed Forces Foundation is the largest shareowner of the company, and owns 84,58% shares of the company. The company does not have a mutual subsidiary relationship with the Turkish Armed Forces Foundation, or with any other company.

12. 12. 12. 12. Public Disclosure of Persons Who Can Have Access to Insider Information Public Disclosure of Persons Who Can Have Access to Insider Information Public Disclosure of Persons Who Can Have Access to Insider Information Public Disclosure of Persons Who Can Have Access to Insider Information Starting from the year 2004 annual report, the list of the persons who can have access to insider information are annually disclosed to the public in the Corporate Management Principles Compliance Reports that take place in the annual reports. The list of persons who can have access to insider information as of the beginning of February 2012 are as follows.

1) Hasan MEMİŞOĞLU Chairman of the Board of Directors 2) Necmettin BAYKUL Vice Chairman of the Board of Directors 3) Ahmet ŞENOL Member of the Board of Directors 4) Birol ERDEM Member of the Board of Directors 5) M. Ayhan GERÇEKER Member of the Board of Directors 6) Erhan AKPORAY Member of the Board of Directors 7) Osman Kapani AKTAŞ Member of the Board of Directors 8) Mehmet TİMUR Member of the Board of Auditors 9) İsmail DİKMEN Member of the Board of Auditors 10) Ali Rıza DADAŞ Member of the Board of Auditors 11) Cengiz ERGENEMAN CEO 12) Özcan KAHRAMANGİL Vice President (MGEO Division) 13) Fuat AKÇAYÖZ Vice President (SST Division) 14) Faik EKEN Vice President (HBT Division) 15) Ergun BORA Vice President (REHİS Division) 16) Ahmet DEMİR Vice President (CFO) 17) İnci UYSAL Internal Audit and Assessment Committee Chairman 18) Aykan ÜRETEN Financing Director 19) Gönül TETİK Accounting and Financial Affairs Director 20) Afşin AKKERMAN Supply Logistics Director 21) Ali Fatih Bilgi Information Management Director 22) Mustafa ERTÜRK International Marketing Director 23) Nihat IRKÖRÜCÜ Human Resources and Support Services Director 24) Baran ÖZER Contracts Director 25) Baki ŞENSOY Strategic Management Director 26) M. Uğur KARAVELİOĞLU Military Wireless Program Director 27) Mehmet Atila AKAY Military Communication Systems Director 28) Sinan ŞENOL Avionic Satellite and Naval Communication Systems Program Director 29) Özge SAVAŞ Radar Program Director


30) Hayrullah YILDIZ EH Self Defense Systems Program Director 31) Fikri ATMACA EH Intelligence and Attack Systems Program Director 32) İbrahim Aybars KÜÇÜK Land and Missile Program Director 33) Fikret ÜLGÜT Defense Systems Program Director 34) Metin SANCAR Air and Naval Programs Director 35) Yavuz Suat BENGÜR Naval Systems Program Director 36) Yavuz BAYIZ Prof. Civil System Program Director 37) Mustafa KAVAL Air Defense System Program Director 38) Murat ACAR Accounting Manager 39) Pınar ÇELEBİ Treasury and Fund Management Manager

Within the framework of Communiqué Series:VIII, No: 54 “Principles Regarding Public Disclosure of Special Circumstances” published at 06.02.2009 by CMB, the list of persons who have access to insider information is also prepared and kept to be presented if demanded. SECTION III SECTION III SECTION III SECTION III ---- BENEFICIARIESBENEFICIARIESBENEFICIARIESBENEFICIARIES

13. 13. 13. 13. Informing of BeneficiariesInforming of BeneficiariesInforming of BeneficiariesInforming of BeneficiariesNecessary case is taken when handling the requests of the beneficiaries for information about the company and on matters that concern them, and when answering them correctly and in an understandable manner. In the Aselsan Magazine which is published quarterly by the company, information on the technical matters regarding the activities that are carried out and on the current social events is given. Aselsan Magazine is sent to the end users of the company products, to the shareholders that had attended to the General Assembly, to the company personnel and to others who may be interested, upon publication. Company employees are informed on the Internet, on many subjects regarding their financial and social rights. Besides, in the company there is an Employee Representation in which 45 currently employed personnel participate, with the purpose of enabling communication between the personnel and management and to provide guidance in social activities. Periodical meetings that are held with the representatives of the employees are platforms where the employer and the employees exchange their views and wishes regarding the current practices. The minutes that are kept at such meetings are communicated to all personnel on the employee representative’s page of the company intranet.

14. 14. 14. 14. Participation of Beneficiaries in the Management Participation of Beneficiaries in the Management Participation of Beneficiaries in the Management Participation of Beneficiaries in the Management Company employees can communicate their expectations and demands to the top management through their representatives. Studies on the participation of the beneficiaries other than the employees and the shareholders will be (re)considered in accordance with the amendments to the Turkish Commercial Code (TCC).

15. 15. 15. 15. Human Resources PolicyHuman Resources PolicyHuman Resources PolicyHuman Resources Policy Arrangements were made regarding working conditions of the personnel according to the vision, mission and principles of the company, hiring, promotions, remuneration,


awarding, layoffs, leaves, disciplinary procedures, rights, duties and responsibilities and other personal rights of the employees. There are, among the employees of the company, 45 employee representatives; 12 of which representing the engineers, 3 representing the administrative personnel, 20 representing the technical personnel, 4 representing the office personnel, and 3 representing the workers. In the year 2011, there have been no complaints from the employees regarding discrimination. 16. 16. 16. 16. Information About the Relations Between Customers and Suppliers Information About the Relations Between Customers and Suppliers Information About the Relations Between Customers and Suppliers Information About the Relations Between Customers and Suppliers The basic principle of the company is to supply presenting continually and promptly flawless products and services to its customers, and continuously develop the processes, services and products in order to fully meet customer needs. For this purpose, in order to meet the requirements of quality standards, a quality system documented with quality handbook, directives, quality plans, standards, auditing and test directives and foresight implemented operations has been designed. For the purpose of procuring the materials and software that are used in the products, as well as the services regarding such products, from reliable suppliers, so that possible quality issues would be reduces, the suppliers are checked for their technical, commercial and quality efficiency and capacity. The results of such assessments are communicated to the supplier firm, and suppliers that meet the required conditions are contracted. Within this context, in the year of 2011, orders were placed with 3.817 supplier firms, 176 of which being subsidiary industry firms. Information about customers and suppliers are classified under appropriate confidentiality levels, and treated according to such classification. Information on the offers received from the suppliers and the correspondence with them are treated as confidential, and are not given to unauthorized persons or to third party firms. In the directives that are created, guarantees are provided to ensure that unfair advantages are not obtained from the customers and suppliers.

17. 17. 17. 17. Social ResponsibilitySocial ResponsibilitySocial ResponsibilitySocial ResponsibilityThe company has donated to the elementary school, faculty and rehabilitation center in the scope of social responsibility. SECTION IV SECTION IV SECTION IV SECTION IV –––– BOARD OF DIRECTORSBOARD OF DIRECTORSBOARD OF DIRECTORSBOARD OF DIRECTORS

18. 18. 18. 18. Structure and Formation of the Board of Directors and IndepenStructure and Formation of the Board of Directors and IndepenStructure and Formation of the Board of Directors and IndepenStructure and Formation of the Board of Directors and Independent Membersdent Membersdent Membersdent Members

Hasan MEMİŞOĞLU Chairman of the Board of Directors / Executive Director

Necmettin BAYKUL Vice Chairman of the Board of Directors / Executive Director

Mustafa Ayhan GERÇEKER

Member of the Board of Directors (Member of the Corporate Management Committee)

Osman Kapani AKTAŞ

Member of the Board of Directors (Member of the Corporate Management Committee)

Ahmet ŞENOL Member of the Board of Directors (Member of the Committee in Charge of Auditing)


Erhan AKPORAY Member of the Board of Directors (Member of the Committee in Charge of Auditing)

Birol ERDEM Member of the Board of Directors There is no board member who has an assignment in execution. Due to the Main Contract Article No.8 of the Company, Board of Directors are composed of privileged shareholders who are representing Turkish Armed Forces Foundation (TAFF) and who are worked for Turkish Armed Forces and retired, and are experienced professional members. In the scope of CMB Communiqué Series:IV No:56 and No:57 Communiques, to comply with corporate management procedures, the number of members will be increased from 7 to 9 including 3 independent members. There will be amendment in Main Contract of the Company for this issue and will be submitted for approval in the Ordinary General Assembly in 2012. The members of the Board of Directors of the company serve without receiving any interest or benefit, with the responsibilities and powers bestowed upon them according to the Capital Markets Law and TCC. Members of the Board of Directors are, according to the “Operating Directives of the Board of Directors”, obliged not to engage in any commercial transaction with the company or regarding any field that fall within the scope of the company’s (activities), either personally or indirectly. 19. 19. 19. 19. Qualifications of the Members of the Board of Directors Qualifications of the Members of the Board of Directors Qualifications of the Members of the Board of Directors Qualifications of the Members of the Board of Directors Members of the Board of Directors are composed of members who have strong ethical standards, vocational education, knowledge, experience and reputation. 20. 20. 20. 20. Company’sCompany’sCompany’sCompany’s Mission and Vision and Strategic Objectives Mission and Vision and Strategic Objectives Mission and Vision and Strategic Objectives Mission and Vision and Strategic Objectives Board of Directors is the highest level strategic decision making, executive and representative body. According to the articles of association of the company, the board of directors is responsible for deciding the strategic plans and supervising their implementation. In this context, the mission, vision and strategic objectives are set by the board of directors, which of them are included in the strategic plan. The level of achievement of these objectives are followed up by using the Information Management System, and checked by the Board of Directors and the General Manager on monthly basis. Current version of mission and vision is made available to the public on the company’s web site. The Company’s MissioThe Company’s MissioThe Company’s MissioThe Company’s Mission:n:n:n: “To design, develop, produce cost efficient product and system solutions electronic technologies, to customers mainly to Turkish Armed Forces by increasing the assets and resources of the company and increasing their worth.”

The Company’s Vision:The Company’s Vision:The Company’s Vision:The Company’s Vision: Has been set as “Being one of the largest 50 defense industry firms of the world, by creating high, original and national technological means and capabilities.”


21. 21. 21. 21. Risk Management and Internal Control Mechanism Risk Management and Internal Control Mechanism Risk Management and Internal Control Mechanism Risk Management and Internal Control Mechanism The Internal Audit and Assessment Committee, which has been created under the Board of Directors, with the purpose of managing the company’s risks, and assessing the control and corporate management processes, audits the units and the processes of the company according the plans that had been prepared, and regularly reports its findings to the Board of Directors. Continuous studies are made to increase and improve the effectiveness of the systems. 22. 22. 22. 22. Members of the Board of Directors and the Powers and Responsibilities of the Members of the Board of Directors and the Powers and Responsibilities of the Members of the Board of Directors and the Powers and Responsibilities of the Members of the Board of Directors and the Powers and Responsibilities of the DirectDirectDirectDirectorsorsorsors Powers and responsibilities of the Board of Directors are stated in Article 13 of the articles of associations of the company, which is titled “Duties and Powers of the Board of Directors” the company will add this issue to its main contract and will submit for approval in Ordinary General Assembly in 2012. Besides, duties and powers of the Board of Directors are also explained in the Operating Directives of the Board of Directors, which has been prepared in the company. In Article 14 of the articles of association, which is titled “Transfer of the Powers to the General Manager” the rules on the transfer of the powers of the Board of Directors to the General Manager are set. Managers’ powers and responsibilities are explained in the “Duties and Responsibilities Directive” that has been prepared in the company. 23. 23. 23. 23. Principles on the Activities of the Board of Directors Principles on the Activities of the Board of Directors Principles on the Activities of the Board of Directors Principles on the Activities of the Board of Directors Agenda of the meetings of the Board of Directors are decided by the Chairman, in a way that would include the subjects that were suggested by the members of the Board of Directors. The matters that the members of the Board of Directors wish to be included in the agenda as well as the suggestions of the General Management regarding the agenda are reported to the Chairman of the Board of Directors. The Chairman of the Board of Directors reviews the opinions of the members of the Board of Directors and the General Management, and finalizes the agenda. Matter that the members of the Board of Auditors wish to be discussed will also be included in the agenda. Matters or urgency that emerge and discussion of which are deemed useful can also be included in the agenda during the meeting of the Board of Directors. According to the Article 10 in the articles of association, the Board of Directors convenes as necessary, and at least once a month. The number of meeting in the year 2011 was 27. (15 of the decisions are the recessional decisions) The place, date, time and the agenda of the next meeting are decided in every meeting of the Board of Directors. General Management does, in accordance with the directive of the Chairman of the Board of Directors, or of the Vice Chairman or else of a Executive Director, and at least 5 workdays before, send the documents regarding the items of the agenda to the members of the Board of Directors and of the Board of Auditors. Invitations cannot be made by telephone, and the members of the Board of Auditors are also invited to the meetings. Members of the Board of Directors must attend the meetings unless they have an important excuse. The members that do not attend must notify their excuses. There is a secretary to provide information to and communicate with the members of the Board of Directors. Furthermore, a reporter is also assigned to carry out the necessary work in this manner.


When entering the resolutions of the meeting, the reporter of the board of directors must observe the provisions of Article 78 of TCC on the Book of Resolutions and of Article 330 on the resolutions of the board of directors. Accordingly, the reporter ensures that the date and number of the resolution, the names and surnames of those who has attended, the names and surnames of those who has not attended as well as their excuses, the meeting agenda, suggestions for and discussions on the agenda, the text of the resolution, and if any the dissenting opinions are entered in the resolution book and; that the signature of the attending members are affixed under it. Every member of the Board of Directors, including the Chairman, has one vote. In case of a tie, Chairman’s vote will not make any difference. Members cannot abstain; they must vote either aye or no. The member who abstains will be deemed to have voted no. The member who votes no will also ensure that his/her arguments are entered into the minutes, and then signs under it. However, in order to ensure compliance with corporate governance principles, Article 11 of “Assembly and Decision Making Quorum” of the main contract is updated and “TCC, CMB, regulations of CMB due to the corporate governance and other related regulations should be considered for members of Assembly and Decision Making Quorum and Board of Directors in case of working outside the company. Decisions taken by the Board of Directors and other operations performed without complying with corporate governance principles shall be deemed as invalid contrary to the main contract" is added to the Article 11. Amendment in the main contract is continuing process and will be presented for approval the Annual General Meeting in 2012. The undersigned resolutions as well as the Preparatory File of the Board of Directors are sent to the members of the Board of Directors and of the Board of Auditors. 24. 24. 24. 24. Restraint of TradeRestraint of TradeRestraint of TradeRestraint of Trade The General Assembly did not pass any resolution regarding the “Prohibition of Engaging into Transaction with the Company” and the “Restraint of Trade” for the members of the Board of Directors of the Company, which are stated in Articles 334 and 335 of TCC. 25. 25. 25. 25. Ethical RulesEthical RulesEthical RulesEthical Rules The Ethical Rules that the Board of Directors laid down for the employees of the company have been printed and announced to the public in the year 2007. They can be read on the company’s internet web site. 26. 26. 26. 26. The Numbers, Structures and Independence of the Committees set by the Board The Numbers, Structures and Independence of the Committees set by the Board The Numbers, Structures and Independence of the Committees set by the Board The Numbers, Structures and Independence of the Committees set by the Board of Directoof Directoof Directoof Directorsrsrsrs

a) The committee in Charge of Auditing Ahmet ŞENOL - Member - Member of the Board of Directors Erhan AKPORAY - Member - Member of the Board of Directors


The duties of the Committee in charge of auditing as stated in the “Working Directive of the Committee of the Board of Directors of the company that is Responsible for Auditing” are in general as follows: - The Committee in charge of auditing is in principle responsible for the operation and

supervision of the company’s accounting system, disclosure of financial information, independent audit and internal control (internal audit).

- The Committee in charge of auditing convenes quarterly, and at least four times a year. The minutes of the meeting will be submitted to the Board of Directors.

b) Corporate Management Committee

Mustafa Ayhan GERÇEKER - Member - Member of the Board of Directors Osman Kapani AKTAŞ - Member - Member of the Board of Directors The directive on the operating principles of the Corporate Management Committee, which has been created in order to work on the Compliance Report that would be prepared as part of compliance with corporate management principles was approved in February 2006. The duties of the Corporate Management Committee as stated in the “Working Directive of the Committee of the Board of Directors of the company that is Responsible for Corporate Management” are in general as follows: - Corporate Management Committee does in principle work on the implementation of the

corporate management principles, Identifies if the corporate management principles are or are not implemented and; if

they are not implemented, identified the causes. Discovers the conflicts of interest that are caused for failure of its implementation. Advises the board of directors on improvements and remedies. In compliance with CMB Communiqué Series:IV No:56 Committee of Candidate Nomination, Committee of Fees and Committee of Early Identification of Risks will be determined by the Board of Directors which will be constituted in Ordinary General Meeting of Shareholders, will be held in 2012.

27. 27. 27. 27. Financial Benefits of Granted to the Board of DirectorsFinancial Benefits of Granted to the Board of DirectorsFinancial Benefits of Granted to the Board of DirectorsFinancial Benefits of Granted to the Board of Directors Monthly remuneration of the members of the Board of Directors are decided by the General Assembly and no other benefits are granted. According to the decision stated at the 36th, Ordinary General Assembly as of 30.03.2011, a monthly payment of TL 1.800 is made to the members of the Board of Directors, to the Executive Directors and to the members of the Board of Directors. There is not any financial rewarding system that has been implemented for the performance of the members of the board of directors. No loans were given by the Company to any member of the Board of Directors or to any manager.


To: The Chairman of the General Assembly of Aselsan A.Ş.To: The Chairman of the General Assembly of Aselsan A.Ş.To: The Chairman of the General Assembly of Aselsan A.Ş.To: The Chairman of the General Assembly of Aselsan A.Ş.

Title of the Company :::: ASELSAN Elektronik Sanayi ve Ticaret A.Ş.Head Office :::: ANKARA

Registered Capital : 500.000.000.-TLIssued Capital : 235.224.000.-TL

Field of Operation :::: To carry out research, development, engineering, production, testing, installation,integration and sales, provide after sales services, engage in trading, assign dealersand agents for such trading for various software, devices, instruments, systems,tools, vehicles, and platforms and engage in all kinds of ventures and activities forpreparation of designs, consultancy, servicing, training, commitments and contracts,construction, publishing, trading, operation and internet services provision as part ofland, air and naval applications addressing all kinds of entities and establishmentsand consumers.

Names and Terms of theBoard of Auditors

:::: Mehmet TİMUR (2010-2013)Ali Rıza DADAŞ (2011-2014)İsmail DİKMEN (2010-2013)

Whether they are partners :::: None.

Nr. of the Board of Directors’meetings attended

:::: 12

Nr. of Audit Board meetingsheld

:::: 12

It has been found out as a result of the audits conducted by our board on thecompany’s journal books, ledgers, cash books, offset and cash slips/vouchers andother documents for activities in the Year of 2011 that all the records and documentsare duly compliant with the established procedures.Dates of audit :27.01.2011 – 24.02.2011 – 24.03.2011 – 28.04.2011 – 26.05.2011– 23.06.2011 –29.07.2011 – 25.08.2011 – 29.09.2011 – 26.10.2011– 30.11.2011 – 29.12.2011

Nr. and results of countingconducted at the companycashier’s office as perparagraph 3 of Sub-Clause 1Article 353 of the TurkishCommercial Code

:::: The company central cashier’s office was subject to inspection 12 times and it hasfinally been concluded that the discharge transactions were in compliance with thepertinent documents.

Company books were subject to audit 12 times; as a result, it has been found out thatthe records are in compliance with the pertinent records.

Dates of audit :27.01.2011 – 24.02.2011 – 24.03.2011 – 28.04.2011 – 26.05.2011– 23.06.2011 –29.07.2011 – 25.08.2011 – 29.09.2011 – 26.10.2011– 30.11.2011 – 29.12.2011

Any complaints andirregularities reported andaction taken thereon

:::: The case transferred to jurisdiction due to the malfeasance of duty is pending.

AUDITOR AUDITOR AUDITOR İsmail DİKMEN Ali Rıza DADAŞ Mehmet TİMUR

Board of Auditor’s ReportBoard of Auditor’s ReportBoard of Auditor’s ReportBoard of Auditor’s Report

Quarterly reports containing our views about the general state of affairs were submitted to the Board ofDirectors.We have audited the accounts and transaction of Aselsan Electronics Industries Inc. for the period of 01.01.2011 -31.12.2011 in accordance with the Turkish Commercial Code, company articles of and generally recognizedaccounting principles and standards.According to our opinion, the enclosed Balance Sheet drawn up as at 31.12.2011, the contents of which are agreedby us, truly reflects the financial position of the company as of the said date whilst the Income Statement for theperiod of 01.01.2011 to 31.12.2011 reflects the operational results for the subject period correctly and genuinely.You are hereby kindly asked to approve the Balance Sheet and Income Statement and issue an acquittal for theBoard of Directors accordingly by your votes.

BOARD OF AUDITORS

Dates and results of auditsconducted as per paragraph 4of Sub Clause 1 of Article 353of the Turkish CommercialCode

::::

Scope of review conducted onthe company accounts, booksand documents, dates ofreview and opinion thereof

::::

Capital ::::


Proposal for Profit DistributionProposal for Profit DistributionProposal for Profit DistributionProposal for Profit Distribution

Distribution under Distribution under Distribution under Distribution under

the Capital Markets the Capital Markets the Capital Markets the Capital Markets

Board RegulationsBoard RegulationsBoard RegulationsBoard Regulations

Distribution under Distribution under Distribution under Distribution under

the Legal Recordsthe Legal Recordsthe Legal Recordsthe Legal Records

Issued Capital 235.224.000,00 235.224.000,00

Total amount of First Legal Reserve, according to the Legal Records 41.246.771,29 41.246.771,29

The information for the profit distribution in the case of privileges according to the Company Articles of Incorporation

Profit for the Period 160.755.145,00 181.508.285,00

Taxes Payable (-) 0,00 0,00

NET PROFIT FOR THE PERIOD (=)NET PROFIT FOR THE PERIOD (=)NET PROFIT FOR THE PERIOD (=)NET PROFIT FOR THE PERIOD (=) 160.755.145,00160.755.145,00160.755.145,00160.755.145,00 181.508.285,00181.508.285,00181.508.285,00181.508.285,00

Accumulated Loss (-) 0,00 0,00

First Legal Reserve (-) 5.798.028,71 5.798.028,71

NET DISTRIBUTABLE PROFIT FOR THE PERIOD (=)NET DISTRIBUTABLE PROFIT FOR THE PERIOD (=)NET DISTRIBUTABLE PROFIT FOR THE PERIOD (=)NET DISTRIBUTABLE PROFIT FOR THE PERIOD (=) 154.957.116,29154.957.116,29154.957.116,29154.957.116,29 175.710.256,29175.710.256,29175.710.256,29175.710.256,29

Donations Made throughout the Year (+) 39.737,00

Net Distributable profit for the period, donations included in Net Distributable profit for the period, donations included in Net Distributable profit for the period, donations included in Net Distributable profit for the period, donations included in

dividend calculationdividend calculationdividend calculationdividend calculation154.996.853,29154.996.853,29154.996.853,29154.996.853,29

First Dividend to Shareholders 46.456.740,00 11.761.200,00

- Cash 46.456.740,00 11.761.200,00

- Non paid-up share 0,00 0,00

- Total 46.456.740,00 11.761.200,00

Dividends distributed to Preferred Shareholders 0,00 0,00

Dividends distributed to members of the Board of Directors, employees, etc. 0,00 0,00

Dividends distributed to Holders of Usufruct Right Certificates 0,00 0,00

Second Dividend to Shareholders 0,00 34.695.540,00

Second Legal Reserve 3.469.554,00 3.469.554,00

Statutory Reserve 0,00 0,00

Special Reserve 0,00 0,00

EXTRAORDINARY RESERVEEXTRAORDINARY RESERVEEXTRAORDINARY RESERVEEXTRAORDINARY RESERVE 105.030.822,29105.030.822,29105.030.822,29105.030.822,29 125.783.962,29125.783.962,29125.783.962,29125.783.962,29

ASELSAN A.Ş. 2011 PROFIT DISTRIBUTION TABLE (TL)ASELSAN A.Ş. 2011 PROFIT DISTRIBUTION TABLE (TL)ASELSAN A.Ş. 2011 PROFIT DISTRIBUTION TABLE (TL)ASELSAN A.Ş. 2011 PROFIT DISTRIBUTION TABLE (TL)

As presented in the table above, out of the net profit for the period that is generated by our company from its 2011 activities;

- In accordance with Article 466/I of the Turkish Commercial Code, First Legal Reserves amounting to TL 5.798.028,71 is going to be allocated,

- Net distributable profit to the shareholders for the period, calculated in the framework of the profit distribution regulations and decisions of the Capital Markets Board is proposed as:

Gross profit amounting to TL 46.456.740 (TL 0,1975 per share of TL 1 and 19,75% on the basis of the capital) (net profit TL 39.488.229 – TL 0,167875 per share of TL 1 and 16,7875% on the basis of the capital) as in the form of cash,

- In accordance with the Turkish Commercial Code, Second Legal Reserves amounting to TL 3.469.554 is going to be allocated,

- The remaining profit is going to be allocated as Extraordinary Legal Reserves,

and dividends to the shareholders are planned to be distributed as of May 31, 2012.

Yours faithfully,

Board of Directors


(Prin

ted

Mat

eria

l)

P.O.Box: 1, Yenimahalle, 06172 ANKARA/TURKEYPhone: +90 (312) 592 10 00 Fax: +90 (312) 354 13 02 - 354 26 69

www.aselsan.com E-Mail: [email protected] is a company of Turkish Armed Forces Foundation.

36 YEARS wITh RELIAbLE TEChNOLOGY

ANNUAL REPORT - ASELSAN · industry, and ranking 80th worldwide 7% 7% of equity capital allocated...

Documents

Transcript of ANNUAL REPORT - ASELSAN · industry, and ranking 80th worldwide 7% 7% of equity capital allocated...