Investor Presentation May 2019 and ASELSAN’s Place in Global Defense

As being the 2nd biggest army in NATO, Turkey has healthy growth rate of defense budget.

2018 Top 10 Spenders vs. Turkey Military Spending of Turkey (5-year averages)

(Billion $) (Billion $) 18,0

USA 649 16,0 CHİNA 250 Defense spending is expected SAUDİ ARABİA 68 14,0 to reach USD 21 Billion USD in INDİA 67 12,0 2019. FRANCE 64 Total global military spending in 2018 is 10,0 RUSSİA 61 around 1,8 Trillion USD. Compared to UK 50 8,0 GERMANY 50 previous year, Turkey has ranked first in 6,0 JAPAN 47 terms of increase in military spending with 4,0 SOUTH KOREA 43 24%, while maintaining its place in the … ranking of global defense spending. 2,0 … 0,0 TURKEY 19 *SIPRI *SIPRI Military Spending as a % of GDP (TURKEY) ASELSAN Global Defense Ranking*

3,0% 1.400

2,7% ) 2,5% 2,5% 2,5% 2,3% 2,3% 2,3% 1.200 50. 2,2% 2,2% 2,2% 2,2% 55. 2,0% 1.000 57. 2,0% 58. 800 62.

1,5% 67. nominal nominal terms 600 - 74. 1,0% 76. 400 80. 0,5% 86. … 20XX 200 2017 90. 93. 2016 2014 2015

0,0% 0 97. 2012 2013 GDP GDP (Billion $ Military Military Spending as a of % GDP 2010 2011 2008 2009 *SIPRI, TÜİK 2006 2007 *Defense News Top 100

2 Shareholder Structure and TAFF

Shareholder Structure Foundation (TAFF)

TAFF BOARD OF TRUSTEES ASELSAN is the only defense company listed on BIST. -President (Chairman) -Vice President - Minister of National Defense - Chief of General Staff - Undersecretary of Defense Industry

Other Free Float 0,10% TAFF 25,70%

ASELSAN TAI ROKETSAN HAVELSAN ASPİLSAN İŞBİR

• TAFF was established by the merger of Land, Navy and Air Forces Foundations.

Turkish Armed • TAFF’s objective is to enhance the warfare capability of Forces Turkish Armed Forces through national defense industry. Foundation • TAFF owns several defense companies operating in separate 74,20% fields.

• The only privilege of the shares owned by TAFF have is nominating 6 members of the 9 members of Board of Directors.

3 Field of Activities

TRANSPORTATION, COMMUNICATION INFORMATION MICROELECTRONICS RADAR, ELECTRONIC DEFENSE SYSTEMS SECURITY, ENERGY and TECHNOLOGIES GUIDANCE and ELECTRO-OPTICS WARFARE TECHNOLOGIES AUTOMATION

COMMUNICATION AVIONIC RADAR SYSTEMS AIR and MISSILE DEFENSE SECURITY

SATELLITE SYSTEMS ELECTRO-OPTIC ELECTRONIC WARFARE LAND and WEAPON SYSTEMS TRANSPORTATION

GUIDANCE and MICROWAVE PRODUCTS COMMAND CONTROL TRAFFIC and AUTOMATION IT and CYBER UNMANNED SYSTEMS SECURITY

MICROELECTRONICS NAVAL SYSTEMS ENERGY and HEALTH

4 Our Affiliates

Local International

KAZAKHSTAN ASELSAN ASELSAN-BAKU ROKETSAN ENGINEERING (KAZAKHSTAN) (AZERBAIJAN) Share : 15% ASPİLSAN A.Ş. Partner : TAFF Share : 1% Share : 49% Share : 100% Founded : 1988 Partner : TAFF Partner : Kazakhstan Foudned: 1998 Assets : 1,2 Bio $ Founded : 1981 Engineering Assets: 1,8 Mio $ Assets : 10,3 Mio $ Founded : 2011 Assets : 37,3 Mio $ ASELSANNET MİKROELEKTRONİK Share: 85% Share : 100% MACEDONIA BRANCH SOUTH AFRICA BRANCH Founded : 2004 Partner : İTÜ ETA Participation : 2010 Assets : 188,2 Mio $ Share : 100% Share : 100% Founded : 2006 Founded : 2014 Assets : 3,8 Mio $ Founded : 2011 Assets : 7 Mio $ Assets : 1 Mio $ ASELSAN BİLKENT MİKRO NANO BİTES A.Ş. Share : 50% Share : 51% Partner : BİLKENT Ünv. Partner : Real Person ASELSAN MIDDLE EAST BARQ QSTP LLC. (QATAR) Founded : 2014 Founded : 2016 (JORDAN) Share : 49% Share : 48% Assets : 24,6 Mio $ Assets : 1,7 Mio $ Partner : KADDB Partner : BARZAN Holding, Investment Group SSTEK A.Ş. ASELSAN HASSAS OPTİK YİTAL Share : 51% Founded : 2012 Founded : 2018 Share : 50% Partners : TÜBİTAK, SSM Assets : 7,6 Mio $ Assets : 0,3 Mio $ Partner : Sivas Optik Founded : 2017 Malzemeleri Assets : 0,6 Mio $ Founded : 2014 IGG ASELSAN INTEGRATED SYSTEMS Assets : 18,5 Mio $ (UNITED ARABIAN EMIRATES) Share : 49% ASELSAN KONYA SİLAH SİST. A.Ş. TEKNOHAB A.Ş. Partner : IGG Share : 51% Share : 30% Founded : 2011 Partner : Konya Sav. Sanayi Partner : HAB,TUSAŞ Assets : 2,8 Mio $ Founded : 2018 GAZİ Unv. Assets : 16,1 Mio $ Founded : 2018 Assets : 0,4 Mio $ SADEC (SAUDI ARABIA) Share : 50% ULAK A.Ş. Share : 51% Partner : TAQNIA DST Partner : SSTEK A.Ş. Foudned : 2016 Founded : 2017 Assets : 1,9 Mio $ Assets : 14,1 Mio $

Assets are given as of 31.03.2019 5 Human Resources

Talent Management

Total Employees : 6.725 University-Industry Cooperation

Engineers : 4.036 Location and Fringe Benefits

Back to Turkey Project

Support Administrative Projects Carried Out with Universities Staff 5% 7% Internship and Co-op Opportunities for High school and University Students Masters and Doctorate Program Incentives for Employees

ASELSAN Academy

Technicians Engineers 28% 60%

6 The Biggest R&D Spender in Turkey

ASELSAN will not pay any corporate taxes till 2023 due to tax incentives on R&D activities.

R&D Spending

Million TL 2.500 2.163

2.000 289 1.675

1.500 312 1.243 912 249 1.000 1.874 200 1.363 507 500 994 57 712 450 0 2015 2016 2017 2018 2019 1Q Client Financed Self Financed

7 2019 1Q Summary Financials

0,8 9,5 +46% 39% 20% Billion $ Billion $

NEW BACKLOG REVENUE INCREASE in EBITDA CONTRACTS (TL) EBITDA MARGIN

Financial Highlights Domestic Sales and Exports

(Million TL) March'18 March'19 ∆% 10.000 Million TL Net Sales 1.365 1.998 46 9.009 9.000 CAGR Gross Profit 332 466 40 27% 889 8.000 Operating Profit (EBIT) 243 344 41 EBITDA 283 395 39 7.000 Net Profit 351 629 79 6.000 5.412 5.000 784 Gross Profit Margin 24,3% 23,3% ↓ 3.850 Operating Profit (EBIT) Margin 17,8% 17,2% ↓ 4.000 8.120 2.739 485 EBITDA Margin 20,8% 19,8% 3.000 2.171 2.535 ↓ 1.998 1.212 1.502 1.633 460 547 4.628 Net Profit Margin 25,7% 31,5% ↑ 2.000 1.038 398 252 83 272 3.365 77 Operating Cash Flow (OCF) (605) (637) ↓ 1.000 103 1.773 2.075 2.192 1.746 935 1.135 1.419 1.361 Free Cash Flow (FCF) (744) (846) ↓ 0 Cash and Cash Equivalents 480 2.555 432 Domestic Sales Exports

8 Our Backlog

Backlog History (Billion USD) New Contract Awards (Million USD) Book-to-Bill Ratio

4.057 $9,1 $9,5

$6,8 2.881 1.947 2,36 2,17 $6,2 2,00* 1.148 2.070 $4,3 411 1,37 1,41 1.305 701 1.154 1.704 816 954 958 443 351 579 406 373 2015 2016 2017 2018 2019 1Q 2015 2016 2017 2018 2019 1Q 2015 2016 2017 2018 2019 1Q <50 50-300 >300 (*) Annualized.

Ministry of National Americas and Europe Defense Exports 0,2% Backlog Aging 10% 4% (Billion USD) TAI Caspian Region 10% 0,6% 2019 2,0 - 2,3 Exports 2020 2,3 - 2,7 Backlog 2021 1,8 - 2,1 Client 2022 0,9 - 1,3 Middle East Distribution and Asia 2023 and Beyond 0,7 - 1,1 3,2% Other 18%

Non- USD TL Defense 7% TL 49% STM Savunma Teknolojileri Müh. Presidency of 23% 60% ROKETSAN Defense Backlog Cost Turkish Land Forces Industries Backlog Distribution Distribution Central Finance Unit 58% Distribution (Currency) (Currency)

EUR USD Defense EUR 15% 25% 93% 28%

9 Prospective Projects and Potential Business Areas

Prospective Projects

MILGEM I-Class Indigenous Laser Guidance Frigate Helicopter Kit

Non-Defense Areas

Railway Signaling Systems Energy Management and Smart Health Systems Grid Systems

10 2019 Guidance

2018 2019 1Q 2019 Guidance

9.009 1.998 40%-50% Net Sales Million TL Million TL Growth

EBITDA 21% 20% 19-21% Margin

738 209 1.000 CAPEX Million TL Million TL Million TL

11 ASELSAN vs. BIST 100

Dividend Per Share (per 100 shares) Earnings Per Share (per 100 shares)

+ 9% 233,0 15,6 214,7 + 56%

137,6 + 80% 7,6 7,8 6,5 76,2 4,2 + 257% 21,3

2015 2016 2017 2018 2019 1Q (*) 2015 2016 2017 2018 2019 1Q (*) (*) Annualized. (*) Annualized.

Stock Performance ASELSAN reached a market value of 4,31 Billion USD as of 31.03.2019.

400,00

350,00

300,00

250,00 167,43 200,00

150,00

100,00 120,02 50,00

0,00

ASELSAN BIST 100

12 Contact

Address

ASELSAN Elektronik Sanayi ve Ticaret A.Ş. Mehmet Akif Ersoy Mah. 296. Cad. No:16 06370 Yenimahalle, Phone: +90 312 592 10 00

Web

www.aselsan.com.tr

@ E-Mail

[email protected]

13 APPENDIX

14 Consolidated Balance Sheet (Million TL)

Assets Liabilities

(Milllion TL) 31.12.2018 31.03.2019 (Milllion TL) 31.12.2018 31.03.2019 CURRENT ASSETS 11.617 11.672 CURRENT LIABILITIES 4.685 4.312 Cash and Cash Equivalents 3.116 2.555 Short-term Financial Liabilities 766 1.057 Trade Receivables 3.072 2.972 Trade Payables 2.549 2.118 Inventories 3.577 4.048 Deferred Income 633 351 Prepaid Expenses 1.319 1.445 Other Short-Term Liabilities 737 786 Other Current Assets 533 652 NON-CURRENT LIABILITIES 4.612 5.093 NON-CURRENT ASSETS 7.857 8.543 Long-term Financial Liabilities 20 0 Financial Investments 779 779 Long-term Trade Payables 1.768 2.221 Long-term Trade Receivables 2.827 3.418 Deferred Income 2.297 2.333 Property, Plant and Equipment 1.336 1.419 Other Long-term Liabilities 527 539 Intangible Assets 1.082 1.151 Prepaid Expenses 504 465 Deferred Tax Assets 734 709 (Milllion TL) 31.12.2018 31.03.2019 Other Long-term Assets 595 602 EQUITY 10.177 10.810 TOTAL ASSETS 19.474 20.215 Share Capital 1.140 1.140 Share Premiums 2.797 2.797 Other Funds 1.260 1.265 Retained Earnings 2.662 4.979 Net Profit for the Period 2.318 629 TOTAL LIABILITIES AND EQUITY 19.474 20.215

15 Income Statement

Consolidated Income Statement (Million TL)

(Milllion TL) 31.03.2018 31.03.2019 PROFIT OR LOSS Revenue 1.365 1.998 Cost of sales (-) (1.033) (1.532) GROSS PROFIT 332 466 General administrative expenses (-) (44) (71) Marketing expenses (-) (25) (29) Research and development expenses (-) (19) (22) Other operating income 509 747 Other operating expenses (-) (375) (450) OPERATING PROFIT 378 641 Income from investing activities 1 0 Share of Losses of Equity-Accounted Investments (2) (1) OPERATING PROFIT BEFORE FINANCIAL EXPENSE 375 640 Financial income 62 271 Financial expenses (-) (121) (255) PROFIT BEFORE TAX FROM CONTINUING OPERATIONS 316 656 Tax income/ (expense) from continuing operations 36 (26) - Current tax expense (2) (1) - Deferred tax income / (expense) 38 (25) PROFIT FOR THE PERIOD FROM CONTINUING 352 630 OPERATIONS Profit for the period attributable to: Non-controlling interest (0,02) 0 Shareholders of the parent 351 630

16 Cash Flow

Consolidated Statement Of Cash Flow (Million TL)

(Milllion TL) 31.03.2018 31.03.2019 OPERATING CASH FLOW (OCF) (605) (637) Net Profit for the Period 351 630 Depreciation and Amortization 40 51 Change in Inventory (282) (465) Trade Receivables (477) (452) Prepaid Expenses (345) (86) Deferred Income (230) (387) Change in Trade Payables (109) 81 Others (14) (9) CASH FLOW FROM INVESTING ACTIVITIES (139) (209) Tangible Assets (49) (118) Intangible Assets (87) (91) Minority Effect of New Establishment - 2 Cash Inflow from Financial Investments (4) (2) FREE CASH FLOW (FCF) (744) (846)

17 Forward Looking Statements

The information contained herein has been prepared by ASELSAN (the Company). The opinions presented herein are based on general information gathered at the time of writing and are subject to change without notice.

These materials contain statements about future events and expectations that are forward-looking statements. Any statement in these materials that is not a statement of historical fact is a forward- looking statement that involves known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Except to the extent required by law, we assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.

This presentation does not constitute an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any securities and nothing contained herein shall form the basis of any contract or commitment whatsoever. No reliance may be placed for any purposes whatsoever on the information contained in this presentation or on its completeness, accuracy or fairness. None of the Company nor any of its shareholders, directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith.

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