Message from the Chairman

Dear Shareholders of ASELSAN,​​

I am honored to come before you as the Chairman of a company that has been the face of technology in Turkey for decades and especially today when it is at its prime. The changes that ASELSAN went through since its establishment in 1975 is an inspiration for our industry. Today ASELSAN is a world class brand with over 5,000 employees, production facilities in 3 continents and products sold and utilized in over 60 countries.

​We maintained our continuous sales growth, which has been a source of pride for us for the last years, this past year as well. Our deliveries increased by 36% in comparison with the last year, generating a gross profit of TL 923 million which translated into a net profit of TL 795 million. Meanwhile, our backlog reached a record high of USD 6.2 billion, an unprecedented figure in our company's history.

ASELSAN share managed to positively dissociate from the rest of the shares traded at Borsa Istanbul, as in previous years. ASELSAN shares provided a return of almost 51% for its investors throughout the year while the return on the main index of Borsa Istanbul BIST-100 generated merely 9%.

Our climb up on the annual Defense News list of Top 100- World's Best Defense Industry Companies continued in 2016. We have been moving up on and our ranking is now 62nd, which was 58th in 2015.

We have made proud progress in the projects we have carried out in various military technology fields in which we operate in 2016. Deliveries to modernize the TASMUS Tactical Field Communication System in the Turkish Armed Forces inventory have started in 2016. Within the scope of JEMUS Gendarmerie Integrated Communication and Information System Project, five radio systems were installed and commissioned in 2016. The acceptance tests of KORKUT Systems developed nationally by ASELSAN engineers have been successfully completed and the systems have been delivered to our army. Modern air defense has been delivered to the Air Force Command of the KORAL Mobile Electronic Warfare System, which enables detection and detection of radar systems while at the same time making the target radars blind and deceptive. Flight tests of the ASELPOD Electro-Optic Reconnaissance, Surveillance and Targeting System developed for combat aircraft platforms have been successfully completed and deliveries have started in 2016.

In 2016, new contracts have been signed in order to achieve higher levels of Turkish Armed Forces capabilities. KALKAN-G Air Defense Early Warning Radar and Arms Detection Radar Project for the needs of the Land Forces, the expansion of the utilization of ADOP-2000 Fire Support Automation System and HERİKKS Air Defense Early Warning and Command Control System, which are already in the Land Forces' inventory, are some of these contracts.

ASELSAN is a technology provider not only for our military but for Turkey in general. Military technologies are translated into novel products in a wide array of areas such as public safety, transportation, health, energy and automation systems, communication and high end agricultural technologies.

In the year 2016, in addition to meeting the national technological needs in line with the mission of our Company, we also enjoy the contribution of our export contracts to the progress of our country. As of today, ASELSAN has been exporting to more than 60 countries including 5 continental countries including Saudi Arabia, Pakistan, Azerbaijan and Turkmenistan. In 2016, our company sold 13 percent of its sales abroad and earned 161 million US dollars in export revenue. Export activities in the field of communication systems, which is the oldest field of our company, continued in 2016. Software-based military radios were delivered to countries like Saudi Arabia, Pakistan and Azerbaijan. In Saudi Arabia, the radio factory opened in 2016, local production activities were initiated through license transfer from our Company. Remote Controlled Weapon Systems, developed and produced by ASELSAN, are currently in use in 12 country inventories. In 2016, the production and delivery activities of these systems continued at full speed. Deliveries were made under the contract signed for the requirements of a Helicopter Electronic Warfare System of a Latin American country, and platform integration and testing activities were carried out.

We continue to have close relationships with our subcontractors, our solution partners, for the strong and healthy growth of our national defense industry. In 2016, we continued to work with 707 domestic subcontractors, including 598 SMEs. These companies were ordered in 2016 with a value of US $ 1 billion.

The development and activities of our foreign affiliates are important for us as well as our export activities, which we have realized through direct sales. In addition to our 5 existing overseas subsidiaries, SADEC Limited Liability Company has been established in Saudi Arabia with 50-50 percent partnership between our company and the Saudi Arabian public company TAQNIA. The Company, which will become operational in the next few years, will enable the design, development, production and sale of radar, electronic warfare and electro-optic technologies to meet the needs of Saudi Arabia and the region, and also provide ASELSAN access to new markets.

ASELSAN Research Center has been certified as an R&D center by the Ministry of Science, Industry and Technology on 26 October 2016 thus, establishing the 6th R&D center in addition to the already existing 5 R&D centers within the Business Sectors.

For ASELSAN, celebrating the 41st year of its establishment, I would like to recite a beautiful saying in Turkish culture that is meant to keep the evil eye away: 41 times maşallah…

I would like to thank our esteemed shareholders for their unrelenting support, our executives and our employees. I would like to take this opportunity to extend our regards on behalf of myself and the Board of Directors.