Aerostar SA

Performance through Professionalism!

AEROSTAR has had the successive names URA-1953, IRAv (aircraft repair

company)-1970, IAV (aircraft company)-1978, and AEROSTAR S.A. since 1991,

when it was registered as a joint stock company with the Bacau Trade Register.

Performance of 2022

Company Profile

Strategy and Business Model

Corporate Governance

Risk Management

Key Performance Indicators

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Note: The Board of Directors’ Report was prepared in

accordance with the reporting regulations in force so as to provide

additional information to the shareholders in the assessment of

the company, its strategies and their potential to succeed.

PERFORMANCE OF 2022

AEROSTAR is a company with almost 7 decades of

experience in the aviation and defence industry.

Over the years, we have established a global footprint,

focusedonfulfillingourcustomers’mission,

requirements and expectations, through continuous

improvement actions at all levels.

Today, thanks to our expertise, we are a national

market leader and integrated supplier in the global

supply chains of the major aerospace companies.

compared to 2021

compared to 2021

compared to 2021

compared to 2021

compared to 2021

AEROSTAR AT A GLANCE

Employees on 31 December 2022

On 31 December 2022

General Director & President

In 2022, we proved ourselves to be

resilient, by adapting to the new market

requirements, to a new reality, by firmly

addressing the instability of the

international context combined with an

increasingly volatile macroeconomic

environment. We have performed in a

complex environment, relying on the

solid foundation of financial stability,

strong partnerships and the expertise of

We need to evolve continuously, and

however difficult this period has been, we

have taken action to achieve our

sustainability goals, making progress

toward our long-term goals.

This is precisely why we have resumed our

investments in new technological

We value the professionalism of all our

employees and remain focused on

building an inclusive culture that

supports our people in their search for

ideas and efforts to be performant at the

This year, when some disturbances in the

supply chain and a global labour shortage

are still foreseen, as a solution, we rely

on the activities for whichwelaid

thefoundations together last

year to give us stability.

The negotiations between the Administration of AEROSTAR S.A. and the Employees’ Commission

for the Collective Labour Agreement 2022-2024 were completed. They provide a benefit package covering

the dynamics of the employees’ needs and requirements as well as salary increases of 15.5%. These

provisions were applied as of 1 April 2022;

The Aerostar share reached the trading threshold of 8.85 lei. At the end of 2022 the price of an Aerostar

share was 7.70 lei.

Aerostar celebrated 69 years since its establishment: in 1953, the first maintenance and repair works of

the military aircraft belonging to the Romanian Air Force began.

During the Ordinary General Meeting, the shareholders of AEROSTAR approved the following: the Board

of Directors’ Report and the Financial Statements for 2021; the Financial auditor’s report onthe audit of

thefinancialstatements; thedischargeof dutyof the members of theBoard of Directors and executive

management; the distribution of the net result of the financial year 2021.

The Ordinary General Meeting of Shareholders was held in accordance with the applicable legal regulations.

The shareholders of AEROSTAR S.A. have unanimously approved the valid votes cast (by secret vote) the

extension of the mandate for:

Grigore HOROI, Mihai DEJU and Daniel BOTEZ as members of the Audit Committee, appointed by

the General Meeting Decisions of 13 August 2020 according to Article 65 of Law no. 162/2017 on

the statutory audit of the annual financial statements and consolidated annual financial

statements, until 10 July 2024.

The shareholders of AEROSTAR S.A. have unanimously approved the appointment of Auditeval

Consulting S.R.L. as financial auditor and the conclusion of the financial audit contract for a

minimum period of 1 (one) year, with the possibility of extension by Additional Act approved by

the Board of Directors of the Company.

Two changes have been made to the executive board:

Appointment of Mr. Filip Alexandru as a Deputy General Director as of October 1, 2022.

Appointment of Mrs. Cristea Andra as a Director of the Logistics Division as of October 1, 2022.

The Ordinary General Meeting of Shareholders was held in accordance with the applicable legal regulations.

At the meeting, the Aerostar shareholders approved the revenue and expenditure budget for 2023, the

Treasury activity budget and the main economic and financial indicators for 2023.

The draft decisions, the materials subject to the approval of the GMS and the forms requested by AEROSTAR

were posted on the company’s website www.aerostar.ro

, The investor Relations section.

Events after the reporting date

No events were recorded after the reporting date that would have an impact on the financial

statements concluded on 31 December 2022.

Additional information on the Events after the reporting date can be found in Note 33.

Export share in turnover

Actual number of staff Net

General liquidity Expenses

for investments

Main economic and financial indicators

financial indicators

Current liquidity indicator

Indebtedness rate

Rotation rate of customer debits

Fixed asset turnover ratio General

Financial rate of return

Net profit rate

78.355 thousand lei

90.718 thousand lei

Exchange rates of the national currency for 2022

* Source: www.bnr.ro/cursurivalutare

AEROSTAR prepares its individual financial statements in accordance with the International Financial

Reporting Standards IFRS.

Monetary indicators

Average exchange rate EURO/12 months

Average exchange rate USD/12 months

Average exchange rate GBP/12 months

Distribution of sales in the sales markets of AEROSTAR

Share of products and services representing business lines

From the turnover of 466,991 thousand lei obtained during 2022, the company sold products and services

in the amount of 143,432 thousand lei on the domestic market, and of 323,559 thousand lei on the foreign

About 69% of the turnover represents export sales. Compared to 2021, the percentage of export sales

slightly decreased in Asia and Africa, but there were significant increases in the percentage of sales on the

European market.

RomaniaEuropeAsiaAfricaCanada+ USA

Manufacture of Maintenance of

aviation productscommercial

Defence systems

- aero, terrestrial

Investments for

In light of the assumed responsibility to build a sustainable future for its employees and the community,

AEROSTAR invests for sustainable goals.

We are going through a period of climate emergency. The energy efficiency measures included in

AEROSTAR’s policies as an energy consumption reduction target, materialized in 2022 through the

implementation of a three-million-euro photovoltaic park so as to benefit from green energy. The

company has achieved the goal that contributes to the increase of sustainability, by reducing global

warming and achieving climate neutrality.

The photovoltaic park consists of over 7000 panels, located on the rooftops of the buildings owned by

AEROSTAR S.A., with a total installed power of 3MW.

In 2022, AEROSTAR S.A. made investments amounting to 26,606 thousand lei. The synthetic summary

of the investment expenses had the weighting shown in the table below:

Made in 2022- thousand lei

Development expenses

Replacement expenses

Weighting by investment category:

Investments - thousand

Measurement, control and adjustment

devices and installations

Means of transport

Furniture, equipment, office supplies

These investments are completed by financial investments worth 50.318 thousand lei

consisting in the acquisition of shares from the capital market.

Aerostar’s investment policies aim at ensuring the sustainable development, as well as the

sustainable use of resources and at reducing the environmental footprint, while sustaining the

professional excellence, securing the effectiveness and optimizing the activity flows.

Non-financial indicators

Climate change mitigation

Atmospheric emissions of greenhouse

800 allocated GES certificates 3114

GES certificates returned Reserve

of 14245 GES certificates 21% less

CO2 emissions to support

production processes

We respect the environment, nature

and natural resources

Pollution prevention

51% more waste recovered in 2022

Emissions of volatile organic

26,5% less emissions generated in 2022

REACH - Regulation on the Registration,

Evaluation and Restriction of Chemicals

Aerostar adhered to the requirements of

the European reach Regulation as early

as 2014, while continuously and

progressively supporting various actions

to reduce the environmental impact.

We manage, evaluate and monitor in a

responsible and effective manner the

activities with an environmental impact.

Through the Environmental

Management System we have clearly

defined the responsibilities and actions

needed to follow and comply with the

conditions authorized under the REACH

Diversity and inclusion

1845 employees 29.2%

25.7% women in management

62.17% trade union membership

We support, respect and

guarantee equal and non-

discriminatory treatment!

53% new jobs, 28% women

We support the professional

development of our employees by

including them in professional training

1831 employees included in

professional training programs

34 hours of training/employee

We support and advocate for quality

Internships conducted in Aerostar in

208 scholarships granted by Aerostar

to students in dual education (for the

school year 2021/2022)

The value of the scholarships granted

for 2022 is 318 033 lei

Multiple partnerships concluded

with pre-university and university

education institutions

Business Conduct and Ethics

We uphold the company’s principles

and values honestly, fairly and with

integrity, respecting the highest

ethical standards!

Investments approved in 2022: 91,5%

of the approved budget allocated to

development investments 77% of the

approved budget, invested in state-

of-the-art equipment.

with 49% more expenditure achieved

for the annual training plan.

Goals for a sustainable future

In 2022, Aerostar continued to invest

in sustainable targets that would

contribute consistently and

systematically to achieving climate

Implementing our objectives that

contribute to climate change

mitigation and support energy

efficiency through energy security

investments: implementing a

photovoltaic park.

An increase in investment expenses

for 2022 by 224% compared to 2021

Involvement in development research

projects that contribute to

sustainable industrialization through

aerostar@aerostar.ro

www.aerostar.ro

COMPANY PROFILE

Aerostar, as a leading regional

independentmaintenance service

authorizations for theexecution of

MRO works on Boeing 737 aircraft

series 300-900, Boeing 737 MAX,

the Airbus 320 family of aircraft,

ceo & neo, as well as for

provider for the Romanian

Ministry of National Defence.

AEROSTAR operates on three business

Manufacturing of

In the field of civil aviation

Aerostar is a supplier of aero-

structures, components and

assemblies for the global aviation

industry, having as end customers

companies such as: Airbus, Ariane

Group, Boeing, Bombardier,

Dassault, GKN Aerospace,

Gulfstream, Premium Aerotec,

SAFRAN landing systems a.o.

AEROSTAR is active in various

upgrading, integration and

maintenance programs for

military aviation and defence

systems, being a first-rate

Aerostar markets

AEROSTAR customers are located in Europe, Asia, Africa, USA and Canada.

Turnover achieved in 2022

We are a national leader and authorized

subcontractor for the global aviation

CANADA+USA 2.73%

In Canada - USA we supply aviation

products and in Asia and Africa we

provide civil aviation maintenance

43,183 thousand LEI

In Europe we provide maintenance services

for civil aviation, aviation products (landing

gear systems, mechanical parts, assemblies

and subassemblies), electronic equipment

and ground equipment.

253,476 thousand LEI

143.432 thousand LEI

In Romania we provide repair services for

military aircraft and repair of electronic parts

and components for military aircraft,

upgrades, integrations and maintenance for

military aviation systems, repair services of

systems and launchers and civil aviation

14,134 thousand LEI

By readapting itself to

requirementsforthe

structure, as well as to the new quality and

environmental requirements, AEROSTAR

maintains its leading position in Romania for the

manufacturing of aviation products and

strengthens its position in the supply

chain of major global aviation and space

In 2022, Airbus Atlantic wasadded tothe list of

our customers, through the negotiated package

for the production of some parts that are part

Due to the fact that demand does not increase at

the same pace for all aircraft types, the reported

period was characterized by a change in the

weighting of various products in the production

structure, with implications in the relocation and

hiring of human resources.

RESULTS IN FIGURES

228,630 thousand lei

141,481 thousand lei

MANUFACTURING OF

Theequipment,assembliesandparts

produced by AEROSTAR are part of a large

number ofcommercial aircraft: AirbusA320,

A321, A330, A350, Boeing B737, B787, B767,

Gulfstream G650, Dassault F7X, Bombardier

Challenger Series 600 and Global Series

5000/6000, as well as parts for the Ariane 6

At the same time, in 2022, serial production was

achieved and started for some A350 aircraft

components,forthecustomer

Airbus Aerostructures.

European missile.

Thecomparativesalesvaluesforthe

manufacture of aeronautical products show the

increase on this level compared to 2021.

AEROSTAR S.A. has a significant business

footprint in the field of MRO Civil

Aviation, being an independent industrial

maintenanceserviceproviderfor

commercial aircraft of the Airbus A320

family CEO&NEO and Boeing B737 300-900.

In 2022, the AEROSTAR maintenance base,

EASApart-145authorized,

developed and consolidated its market

position, obtaining an extensive range of

permits from civil aviation authorities in

several countries outside the European

In 2022 we continued the development and

upgrading programs, both at the Bacau

maintenance centre and at the maintenance centre

in Iași. The investment process aims both to

accelerate the training efforts and implicitly to

specialize the technicians and engineers dedicated

to these activities and to continue the endowment

of hangars with modern equipment, which

implicitly lead to an increase in maintenance

capabilities and capacities and last but not least

to the improvement of the efficiencyofthe

operating personnel.

The comparative sales values for MRO Civil Aviation

services show the increase on this level,

compared to 2021.

In 2022, the maintenance portfolio of the

Boeing 737 MAX aircraft was expanded, with

maintenance work carried out on the first

Boeing 737-MAX8 aircraft operated

by one of our traditional customers

“SMARTWINGS”.

RESULTS IN FIGURES

127,924 thousand lei

109,119 thousand lei

AEROSTAR is an authorized economic

operatorregisteredintheunique

Register of economic operators and

production and/or defence services

capacities of the national defence

AEROSTAR is a maintenance centre for

the F-16 aircraft of the Romanian Army.

In the category of defence systems,

AEROSTAR is activein modernization,

integration and maintenance programs

ofmilitaryaviationanddefence

AEROSTARhasconsistently

developed the capabilities needed to

strengthen its position as a supplier and

its expertise in the field of launch

systems, platforms and launch and

command components – fire control,

manufacture of launchers,

maintenance, logistic support and

The comparative sales values for the services

dedicatedtodefencesystemsshowa

downward trend on this level, compared to 2021.

RESULTS IN FIGURES

101,202 thousand lei

111,577 thousand lei

DEFENCE SYSTEMS

Human resources are an important factor in the performance, evolution and development of the company.

AEROSTAR is involved in supporting its employees, their professional development, as well as in attracting

and retaining them in the organization through the pursuits included in the development strategy and

performance evaluation.

EMPLOYEESGENDER DIVERSITYAGE DIVERSITY

1845 employees167 management positionsPercentage of employees by age groups

Employee benefits

The collective labour contract for the period 01.04.2022 – 31.03.2024 provides a benefit package to cover

the dynamics of the employees’ needs and requirements and salary increases of 15.5%.

Social and personal aspects

On 31.12.2022, AEROSTAR had an effective number of 1845 employees. Compared to the same period of

last year, the staff has increased with 97 employees. Of the total employees, 31% are employees with higher

education. 167 employees are in management positions.

Through the HR policies adopted, AEROSTAR ensures equal opportunities for all employees, without

discrimination, in terms of professional career or any other work practice.

Moreover, while recognizing the importance of stable employment for both the employees and the local

community, AEROSTAR continuously seeks to improve professional and social integration, currently

having 91.38% of the individual employment contracts concluded for an indefinite period, thus avoiding the

excessive use of temporary work.

Diversity and inclusion

Beingawarethatdiversityandinclusionarepowerfuldriversofstability,creativityandperformance,through

itspolicy,AEROSTARpromotesequalopportunitiesandfightsallformsofdiscrimination.

Thus, in the context of employment relations in the company, the principle of equal treatment for all

employeesapplies,whichpreventsanydirectorindirectdiscriminationagainsttheemployeesaimedatnot

granting, restrictingorremovingtherecognitionofuseorexerciseofrightsprovidedforbylabourlegislation

andtheCollectiveLabourAgreement,basedonsexcriteria,sexualorientation,age,race,ethnicity,religion,

politicaloptions,socialorigin,disability,familysituationorresponsibility,membershiportradeunionactivity.

The share of women in the management structure is 25,7%. The

share of newly employed women in 2022 is 28,0%

Gender and age diversity

In terms of gender distribution, given the object of activity of AEROSTAR S.A., a share of 29,2% is

represented by women in the personnel structure.

Work relations and social dialog

In AEROSTAR S.A. a collective Labour Agreement is in effect for the period 2022 – 2024, which was

concluded between the administration of the company and the social partners and includes the Code of

Conduct and Ethics that sets out the general guidelines for conducting the company business in accordance

with the highest standards of business ethics.

The average degree of syndication of the company in 2022 was 62,17%, a slight decrease

compared to 2021.

Health and safety

During the reporting period, no work accidents were recorded in AEROSTAR. Aerostar acts consistently to

reduce the risks of accidents and diseases and applies in its activity internal rules and regulations that

ensure compliance with legal requirements. During 2022 no employees suffered from occupational

diseases or dangerous incidents.

COVID-19 pandemic

GENDER DIVERSITYHEALTH AND SECURITY

degree of syndication

of individual employment contracts

concluded for an indefinite period

Share of women in

Share of women in the

management structure

In order to protect its employees against Coronavirus infections, AEROSTAR continued in 2022 the

implementation of the General Plan of measures with specific regulations.

Training, training and professional development

Aerostar creates long-term partnerships to strengthen its connections with the educational institutions, in

order to attract young people to internships and study.

At the same time, the priority of AEROSTAR is the implementation of agreements concluded with both

vocational and technical pre-university education institutions and higher education institutions, with a view

to setting up classes and/or groups in specializations of interest to the company.

By training employees in professional development and supporting inclusive culture, each employee

can realize their full potential and contribute with our help, thus ensuring the evolution of the

professions of tomorrow.

We facilitate the integration of new employees, and especially young people, by including them in

dedicated vocational training programs. In 2022, professional training courses were organized for the

employees of the company, aiming with priority to cover the training needs in the areas of interest for the

production activities.

Principles and values, human rights, fighting corruption and bribery

Aerostar’s activities are conducted in accordance with the highest international standards of business,

honesty and integrity.

AEROSTAR S.A. respects and guarantees equal and non-discriminatory treatment in relation to its

employees, partners, collaborators and customers. The personnel of the company behave professionally,

thus ensuring in a transparent and impartial manner diversity and equal opportunities in relation to all

stakeholders, while avoiding any action that could be interpreted as an act of discrimination. AEROSTAR

respects the Universal Declaration of Human Rights.

employees included in training

training hours/employee

students in internships

students in internships

STRATEGY, ENVIRONMENT AND BUSINESS MODEL

the company’s activity

AEROSTAR’s business focuses on increasing performance through continuous improvement and

professional development of employees in the spirit of integrity, innovation and initiative. AEROSTAR

focuses on meeting the requirements and expectations of its customers, while acting for continuous

improvement at all levels.

Inthefield of civilaviation, we provideaerostructures, components and assemblies for theglobal aviation

We hold authorisations for the maintenance of commercial aircraft and are currently authorized to perform

type A, B, C and D works on the Boeing 737 aircraft series 300-900, Boeing 737 MAX, Airbus 320 family, CEO

& NEO, as well as for components.

We are a maintenance centre for F-16 aircraft belonging to the Romanian Army and we are part of the

national defence industry in accordance with Law 232/2016.

The synergy of our skills and experience for the civil and military market contributes to

strengthening Aerostar as a sustainable and future-proof company.

AEROSTAR acts in the global market of products and services in the aviation and defence industry as an

independent company.

Committed to a sustainable future, our company’s top management has adopted an ambitious strategy and

an integrated business model based on the process-systemic approach and RISK-based thinking.

The production activities are carried out on the basis of commercial contracts concluded with the clients,

who are integrators and/or end users/beneficiaries in the aeronautical and defence industry.

The company’s management policy is focused onmaintaining a solid capital base, for continuous

development, in the context of the global market and competitive edge through quality,

capabilities, high-level technologies for continuous and organized development and implicitly for

achieving our strategic objectives.

The business model of the company did not change despite the instability conditions caused by to the

international context, but the way the activities were carried out was adapted in relation to the specific

nature of the activity flows.

Aerostar continues to act firmly to ensure business sustainability and to keep unaffected the production

capabilities, and focuses on ensuring the employees’ health and safety.

We fully comply with the applicable national and international law, acting constantly, intensively and

transparently to pursue the growth opportunities and to ensure access to new programs in the aviation and

External environment

Internal environment

The year 2022 was characterized by instability due to the international context, with difficulties in the

supply of raw materials and materials, along with a general increase in demand. Furthermore, the

increase in production costs as well as the overall inflation led to uncertainty over future costs and as a

result, the suppliers’ reluctance to make long-term commitments.

In terms of demand for products and services provided by AEROSTAR, a selective increase was observed.

The external environment

Since the summer of 2022, the pandemic restrictions have been lifted and most countries have dropped the

quarantine requirements. This has positively influenced the aviation industry, by the resumption of the

international air travel traffic.

In terms of supply chains, the suppliers of products and services did not manage to regain the production

capacity they had before the pandemic, and in some cases the lack of qualified personnel has directly

contributed to the crisis in the global supply chain.

The year 2022 saw an increase in electricity and gas prices, which led to chain increases in the prices of

various materials and services from certain suppliers.

The war crisis in Europe

Both the geopolitical instability and the imposed sanctions had various influences. The new global logistical

challenges and disruptions in the supply chains force the airlines to seek ways to supply raw materials from

other sources, which slows down the recovery of the aviation industry and leads to higher raw material

purchase prices.

The impact of the COVID pandemic

The impact of the pandemic on both the social and economic aspects, and the changes thus generated, have

imposed a preventive management approach in relation to all components and functions of the

organization. During 2022, AEROSTAR continuously monitored the evolution of the COVID-19 pandemic,

considering that there are no uncertainties regarding its ability to continue operating in the event of

successive pandemic waves.

Climate change is one of the major global challenges we face. AEROSTAR continuously assesses the

environmental risks and opportunities identified in its operations. As regards the reporting period, there is

no significant impact on the company’s assets and liabilities.

Internal environment

The workforce shortage in the aviation industry remains a real problem and challenge given the demand for

qualified and specialized personnel, the high level of professional experience and training required by the

specific activities in the field.

The aviation industry is a dynamic sector with rapid changes, in a period of uncertainty. The company’s

prospects largely depend on the global context and the evolution of key factors. The pandemic situation as

well as the global economic and geopolitical crisis have not changed AEROSTAR’s commitment to its

established responsibilities. The conflict between Ukraine and Russia did not directly affect the company’s

business, but the resulting effects are a constant concern for the company.

Committed to a sustainable future, through its objectives and commitments, the company channels

its efforts to achieve the main goal of increasing sustainability by associating profitability with

responsibility, byincreasing value in the short, mediumand long term and thus by increasing the company’s

performance. Through the objectives addressed in the company strategyand confirmed inthenon-

financialstatement, AEROSTAR aims yearafteryearto exceed the targets by meeting the proposed

objectives. The AEROSTAR strategy involves increasing commitment in all aspects of sustainability.

The environmental, social and personnel aspects, the respect for the human rights, fighting corruptionand

briberyareprioritiesfor AEROSTAR, thereforetherelevant performance dataand indicators are

communicated in the annual and regular reports in line with the best practices, procedures andpolicies of

the company, whilefollowing the guidelines of the legislation in force.

We are continuously following the progress of the proposed commitments!

Reduction of atmospheric

emissions of greenhouse

gases and emissions of

volatile organic compounds;

Reducing the environmental

impact by increasing waste

recovery and educating all

employees in the spirit of

minimizing waste generation

to improve environmental

environment, nature and

Training the employees in

their professional

development and supporting

inclusive culture, in which

each employee can reach

their full potential and

contribute with our help,

thus ensuring the evolution

of tomorrow’s professions;

Improving the quality of life

at work, ensuring the

health and safety of

employees and maintaining

a thriving social dialog;

Developing partnerships to

attract young people to

internships and study;

Improving professional and

social integration.

Developing partner

relationships so that we

can be a reference point

for our customers;

Strengthening the position

of strategic player in the civil

and military aviation

industry and creating

sustainable added value;

We uphold the highest

standard of professional

1.Climate change2.Top employer

3.Involvement in

We respect, support and

guarantee equal, non-

discriminatory treatment

through equal opportunities

for all our employees.

These targets are listed in the table of key performance indicators on page 48.

The Board of Directors of AEROSTAR S.A. was elected for a period of four years at the General Meeting of

the Shareholders on 9 July 2020. The election took place by secret ballot, with the new 4-year term from

11.07.2020 to 10.07.2024.

AEROSTAR’s Board of Directors consists of:

Aviation engineer

Further information on the Board of Directors can be found in the Chapter Corporate Governance.

AEROSTAR MANAGEMENT

Economist Vice-

NICOLAE Aviation

engineer Member

In relation to the organization and management system of AEROSTAR S.A., the management structure at

operational level ensures the management of the activities based on a divisional organization that relies on

administrative centres in the field of production, auxiliary activities and functional activities.

The executive management is ensured by the General Director and the Financial Director. The management

structure at the executive-operational level is completed by the other division directors and directorates.

On October 1, 2022, two changes occurred in the executive management, as follows:

The appointment of Mr. Filip Alexandru as a Deputy General Director

appointment of Mrs. Cristea Andra as a Logistics Division Director

The direct participation of the executive managers in the share capital of the company is below 1%. There

were no litigations with the above-mentioned persons.

Filip Alexandru

Rogoz Vasile Laurențiu

Popa Dan Paul Mălin

Iosipescu Șerban

Veleșcu Ioan - Dan

Branche Cătălin Bogdan

Position General

Financial-Accounting Director

Deputy General Director Quality

Human Resources Director

Logistics Division Director

Defence Division Director

Aeronautical Products Division Director

Director of MRO Civil Aviation Division

Utilities and Infrastructure Division Director

AEROSTAR S.A. carries out its object of activity by using the joint resources of the organization in an

integrated manner. The divisional structure maintains the organizational principles and the use of resources

in a unitary, competitive and integrated manner. This organising manner has ensured the development of

capacities needed to carry though new programs in the field of civil aviation and defence, as well as the

necessary investments for this purpose. The management of the company is in a unitary system.

The significant shareholders of AEROSTAR S.A. are IAROM S.A. Bucharest and EVERGENT Investments

S.A. Bacau. The synthetic shareholding structure of the company on 31 December 2022 is shown below:

There are no litigations with the persons mentioned above. This year there have been no records of

subscriptions of new shares, participation certificates, convertible bonds, options or similar rights.

Relation with shareholders and

the capital market

In relation to the shareholders, Aerostar has aimed at protecting and securing the shareholders’ rights,

The right to participate in the General Assemblies directly or by representation – by providing them

with special powers of attorney, ballots by correspondence, other useful information;

The right to have a fair treatment, regardless of holdings;

The right to receive dividends in proportion to each shareholder’s holdings.

In relation to the capital market, Aerostar fulfilled all the reporting obligations arising from the legal

provisions by publishing the mandatory continuous and periodical reports in the electronic system of the

Financial Supervisory Authority and of the Stock Exchange, on the company’s website and by means of press

According to the provisions of the Corporate Governance Code, continuous and regular information

was disseminated simultaneously, both in Romanian and in English.

Evergent Investments S.A

Other shareholders

Number of shares

The shareholders can obtain information about Aerostar and the main events on the company’s website

www.aerostar.ro

Annual and semestrial reports for the last ten years, quarterly reports for the last five years, current reports,

as wellas otherusefulinformationfor shareholders canalso bedownloaded from the same source.

There are no changes to the rights of shareholders. There were no major transactions entered into by the

Company with its concertedly acting persons or in which such persons were involved in the relevant period

Aspects concerning the company capital and management

There have been no changes affecting the capital and management of Aerostar S.A.

The company was not unable to comply with its financial obligations during this period.

AEROSTAR’s relation with the parent company,

other shareholders and the companies where it holds capital

Aerostar is a subsidiary of IAROM S.A. and therefore the parent company that consolidates the financial

statements of the group is IAROM S.A., with the unique identification code 1555301 and its registered

office in Bucharest, at no. 9, Aerogării Blvd.

The parent company will prepare and publish a set of consolidated financial statements in accordance

with the applicable accounting regulations for the financial year ended 31.12.2022. Aerostar’s relationship

with its parent company and with the companies where it holds capital:

Affiliated parties

As of 31.12.2022, AEROSTAR S.A.’s holdings in other affiliated entities are as follows:

subsidiary/branch

Main activity NumberVoting

of shares rights

Financial information for the last

financial year (year 2021) for

which the financial statements

of the affiliated companies were

cod CAEN100100%

Foar S.R.L. Bacău

AEROSTAR’s holdings in these companies are recorded at cost. Both companies in which AEROSTAR

holds stakes are registered in Romania. The transactions with the affiliated parties are covered in financial

statements, Note 26.

The production facilities and capacities of Aerostar S.A. are located in Bacău, Romania, where the

company’s registered office is located, at no. 9, Condorilor Street, postal code 600302 and at the secondary

place of business headquarters without legal personality, that is a workplace in Iași, 25B Aeroportului

The company owns land in a total area of 47.87 hectares, with access to the European road E85. Aerostar

has direct access to the runway of the “George Enescu” airport in Bacau.

At the registered office are built all types of facilities necessary for the proper performance of the

production activity, according to the object of activity.

The production facilities include hangars, industrial halls, test benches and rigs, administrative and social

facilities. The company also holds office spaces for technical and economic activities.

All these spaces are maintained in adequate condition. The built area of the buildings is

approximately 14,06 hectares.

The assets of Aerostar S.A. comply with the provisions established in the health, safety and environmental

management system, in line with the applicable legislation and regulations on occupational safety, as well

as with the standards on property protection and safety.

On 31 December 2022, Aerostar S.A. Bacău owned tangible assets for carrying out the activity in a gross

value of 343,916 thousand lei, materialized in land, buildings, special constructions, installations,

technological equipment, means of transport:

Category of tangible assets

Estimated useful

Investment property

Technical installations, of which:

technological equipment

means of transport

Other tangible assets TOTAL

In 2022, there were no identified risks regarding the ownership over tangible assets.

The shares of Aerostar S.A. Bacău have been traded since 1998 on the regulated market managed by the

Bucharest Stock Exchange.

Main characteristics of the issued securities: 152.277.450 nominative, ordinary shares of equal value, fully

paid, issued in dematerialized form and highlighted by registration in the shareholders Register

administered by Depozitarul Central S.A. Bucharest.

Aerostar S.A. Bacău is registered as an Issuer with the following data: Unique registration code 950531,

ISINcode ROAEROACNOR5, stockexchange symbolARS, alltheissued shares belonging to the Standard

*) source: Monthly bulletin issued by the Bucharest Stock Exchange

During 2022 Aerostar S.A. did not issue bonds or other similar securities; no new share subscriptions

were registered, no certificates of participation, convertible bonds, options or similar rights; there was no

program to purchase own shares.

30.0431.0530.06

31.0731.0830.0931.oct30.nov31.dec

Aerostar shares – in figures

Nominal value per share (lei)

Price at the end of the period (lei) *)

Market capitalisation (lei)

Maximum price (lei)*)

Minimum price (lei) *)

Result per share (lei)

The quality and environmental management system complies with all relevant regulations and standards

and meets the strictest expectations. Therefore, we use an integrated quality and environmental

management system to ensure that the quality and environmental aspects are compliant, continuously

improved and standardized.

We are certified on the requirements of the standard ISO 9001, the environmental management standard

ISO 14001 and the occupational health and safety standard ISO 45001.

We are also authorized as a maintenance organization Part 145, a manufacturing and design organization

part 21G and part 21J respectively. Our defence-related partnerships have led us to implement the quality

management system on NATO quality assurance requirements AQAP 2110 and AQAP 2210.

From the point of view of social responsibility and sustainable development, AEROSTAR has set the

following objectives in the environmental field: to improve the performance in the field of pollution

prevention, sustainable resource use and climate change mitigation, in compliance with the guidelines of SR

ISO 26000 on social responsibility.

The quality and environment policy adopted by Aerostar has as strategic objectives: to meet the customer

requirements, to comply with the legal and regulatory requirements applicable to the activities carried out,

to increase the environmental performance, to ensure full safety for the users of Aerostar products and

services, as well as continuous improvement of the competitiveness of our products and services.

Certifications,

Accreditation in 2022

In 2022, the certification of the quality management system in AEROSTAR S.A. to the requirements

of ISO 9001:2015 was extended for the field “design, development and maintenance of software

At the same time, the certification of the quality management system was maintained, according to the

requirements of the standard SR EN ISO 9001:2018.

AEROSTAR S.A.’s scope of authorization as a maintenance organization Part 145 for the MRO Centres of

Bacau and Iasi, issued by the Romanian Civil Aviation Authority was extended.

AEROSTAR S.A.’s scope of authorization as a maintenance organization was extended by the Turkish Civil

Aviation Authority.

AEROSTAR S.A. has been authorized as a maintenance organization by the Cayman Islands Civil Aviation

Authority and the UK Civil Aviation Authority.

The quality management system was recertified to the NATO quality assurance requirements of AQAP

2110 and AQAP 2210.

AEROSTAR S.A. has been authorized as a maintenance training and examination organization, RMAR 147,

by the National Military Aeronautical Authority.

Thus, in 2022 were maintained both the authorizations issued by civil aviation authorities and the

authorizations obtained from the customers Airbus, Boeing, Safran, GKN, Premium Aerotec.

The re-certification and continued validity of each of these certifications and authorizations confirm the

concern and good practice established in AEROSTAR for risk management.

The implementation of the environmental policy in accordance with SR EN ISO 14001 and the courses of

actions established for the implementation of the general management objectives have led to the

improvement of the company’s environmental performance.

Aerostar has a dedicated department for verifying the compliance with the provisions of the

environmental legislation, which coordinates all activities specific to environmental protection.

AEROSTAR has complied with the environmental legislation, as well as with the requirements of the

integrated Environmental permit, water Management permit and greenhouse gas emissions permit. The

results of the inspections carried out by the Commissioners from the Environmental Guard of Bacău

confirm that AEROSTAR complies with the applicable legal and regulatory requirements.

Activities with an environmental impact shall be controlled by internal operational controls, respectively by

analysing the results of the monitoring actions and measurements carried out in accordance with the

provisions of the environmental authorizations relating to air emissions, generation of waste, noise and

The sustainable use of resources and energy efficiency is a continuous concern in the company AEROSTAR

The industrial water needs are fully ensured by the operation of own wells. The technological wastewater

resulting from chemical and electrochemical processes is collected and treated at the wastewater

neutralization stations located on the company’s site.

The total amount of water discharged to thesewerin 2022, in relation to thecompany’s turnover, dropped

by 14.5% compared to 2021 and by 45.4% compared to 2020.

The company continued to optimize the distribution of the thermal agent and to increase the energy

efficiency of the buildings, so that the electricity consumed in 2022 in relation to the turnover decreased by

42% compared to 2021 and by 40% compared to 2020.

In 2022 Aerostar completed the implementation of a photovoltaic park consisting of over 7000 panels,

located on the roof of the buildings owned by AEROSTAR S.A., with a total installed power of 3MW, to

benefit from its own green energy.

Pollution prevention and

The volatile organic compound emissions decreased in 2022 by 26.5% compared to 2021 and by 23.8%

compared to 2020, while the company continued to replace the solvent-based paints with water-based

We monitor both the hazardous and the non-hazardous waste, we use it and transfer it through an

authorized recycling company, in accordance with the legislation in force.

2016201720182019202020212022

Emissions of volatile organic compounds

Actual emission

Target emission

All waste categories are managed in compliance with specific legislative requirements. All waste generated

from the activities carried out within the company is stored separately in suitable containers and then

handed over to authorized operators for their collection, recovery, disposal.

In 2022, the amount of recoverable waste represented about 84% of the total amount of waste generated

from internal activities (51% more waste recovered than in 2021 and 54% more waste recovered than in

Requirements for

with the REACH Regulation

All hazardous chemicals and mixtures used in AEROSTAR are managed according to the applicable

regulations in force. The hazardous chemicals and mixtures covered by the REACH regulation are used in

compliance with the conditions imposed by the authorizations issued by the European Commission.

AEROSTAR has complied with all obligations arising from the greenhouse gas emissions permit: -

amonitoringreport for greenhouse gas emissions generated in2022 was prepared and validated by the audit

carried out by an accredited surveyor;

-compliance intheUnique EuropeanRegisterfor Greenhouse Gas Emissions -completed inApril - when 3945

certificates were returned.

No non-conformities were documented following the survey audit on the greenhouse gas emission

management, and consequently, the emissions for the year 2022 were validated.

waste generated in 2022

recovered wastedisposed waste

241548197431197666

84%2019202020212022

waste generated in 2019-2022

total waste generatedtotal hazardous waste

The atmospheric emission values measured in 2022 revealed that these values are below the maximum

allowable value provided for in the applicable legislation in force.

Assessment of issues

impact of the activity

As regards the impact of the company’s business, AEROSTAR acts responsibly, efficiently and continuously

to ensure compliance with the applicable legal and regulatory requirements and the contractual

requirements in relation to the customers.

A permanent preoccupation within the company remains the employees’ training with a view to raising

their awareness of the need to comply with the environmental requirements.

Evolution of greenhouse gas emissions

Allocated GES CertificatesReturned GES Certificates

CORPORATE GOVERNANCE

As a company listed on the Bucharest Stock Exchange, AEROSTAR S.A. aims at complying with the principles

and recommendations provided in the Code of Corporate Governance of the Bucharest Stock Exchange

adopted on 11 September 2015.

At the same time AEROSTAR’s Corporate Governance System is in accordance with the provisions of

the constitutive deed of the company and in accordance with the provisions of the laws nos. 31/1990 and

24/2017, as well as with Regulation no. 5/2018 of theFinancial Supervisory Authority.

The implementation of the corporate governance rules ensures a transparent decision-making process,

founded on clear rules and objectives meant to lead to an increased level of trust of the shareholders in the

company. AEROSTAR S.A. attaches special importance to the corporate governance by reviewing the level

of compliance with the provisions of the Corporate Governance Code issued by the Bucharest Stock

Exchange, entered into force on 4 January 2016.

Corporate governance structures

The corporate governance structures are:

Shareholders – The General Meeting of the Shareholders

Board of Directors

Audit Committee

Executive management

General Meeting of Shareholders

The procedure for organizing and conducting the General Meetings of the Shareholders is

published on the website www.aerostar.ro/Investor Relations/Reference Documents.

In order to ensure an equal treatment and a full and fair exercise of the rights of the shareholders, the

company provides them all relevant information with reference to the GMS and the resolutions

adopted both in the regulated communication system (national newspaper, reports to the Financial

Supervisory Authority and BSE), as well as in the special section „Investor Relations” on the company’s

website that is easily identifiable and accessible.

AEROSTAR exercises all due diligence, in compliance with the requirements of the relevant legislation, to

facilitate the participation of shareholders in the proceedings of the general meetings and the full exercise

of their rights. Shareholders may participate and vote personally in the General Meeting, but they also have

the possibility to vote by proxy or by correspondence.

The General Meetings of the Shareholders took place in full compliance with the Law 31/21990 regarding

the companies, the Law 24/2018 regarding the capital market and the applicable regulations issued by FSA,

as well as any other incidental legal norm.

Over the last years, the company has distributed dividends to the shareholders and consolidated a dividend

policy that guarantees the shareholders’ satisfaction while also providing resources for the development of

In accordance with the legal provisions applicable, the claim to collect the dividends approved by the

General Meeting of Shareholders ceases to generate effects after the expiry of three years calculated from

the “date of payment” of the dividends for each financial year.

Board of Directors

The Board of Directors of AEROSTAR was elected for a four-year period from 11.07.2020 until 10.07.2024)

at the General meeting of shareholders of 9 July 2020.

AEROSTAR manages its activity in accordance with responsible corporate governance principles aimed to

create sustainable values in all areas of activity of the company.

9 (nine) meetings of the BoD took place during 2022.

There is no agreement, understanding or family tie in connection with the nomination of the administrators

of the company. There were no resignations or dismissals among the members of the Board of Directors, or

in connection with the auditor.

There is no litigation between the company and the directors regarding their activity. None of the

administrators was involved in a litigation or administrative procedure with AEROSTAR during the last 5

Audit committee

Based on the provisions of the Corporate Governance Code in conjunction with the provisions of Law

no.162/2017, an independent audit committeewas established, consistingof threemembers appointed by

the Ordinary General Meeting of 13 August 2020.

The attributions of the independent audit committee are the ones provided in its rules of procedure,

approved by the Board of Directors, completed with the provisions of Law no. 162/2017 and of

UERegulationno.537/2014, that canalsobefound on www.aerostar.ro/

Investor Relations/ Reference

Since 2018, an Audit Committee has been functioning in AEROSTAR in accordance with the provisions of

Law no. 162/2017 regarding the statutory audit of the yearly and consolidated financial statements.

The Audit Committee meets regularly, at least 4 times a year, as well as exceptionally, as the case may be.

Independent auditor: The shareholders of AEROSTAR S.A. have unanimously approved the appointment of

Auditeval Consulting S.R.L. as a financial auditor and the conclusion of a financial audit contract for a

minimum period of 1 (one) year, with the possibility of extension by Addendum approved by the Board of

Directors of the Company.

Code of Conduct and Ethics

AEROSTAR upholds the company principles and values in an honest and fair way, with integrity, while

consistently acting to comply with the highest ethical standards in business, by voluntarily adopting for

several years AEROSTAR’s Code of business conduct and ethics. This code is posted on the company’s

website www.aerostar.ro

and is part of the provisions of the collective labour agreement.

Insofar as this Code requires a higher standard than the one required by the commercial practice or by the

applicable laws, rules or regulations, we adhere to these higher standards. This code is mandatory for the

administrators, employees and is adopted in all the aspects related to the employees, as well as in relation

to the investors, customers, suppliers, representatives of the local community, other business partners.

The Board of Directors pays special attention to the observance of the corporate governance principles in

order to guarantee:

that performance is achieved in terms of sustainable development of the company;

accuracy and transparency of the decision- making process of the company;

the observance of the shareholders’ rights and their fair treatment by protecting and

implementing their prerogatives in practice;

transparency and access to information by periodically publishing the relevant financial and

operational information.

Details about the compliance with the principles and recommendations provided in the Corporate

Governance Code of the Bucharest Stock Exchange are presented as an integral part of this report.

Handling conflicts of interest

In terms of accounting regulations, AEROSTAR is a subsidiary of the company IAROM S.A. Aerostar

presented in transparency conditions, according to the applicable regulations, the structure of the

company’s shareholding and related parties.

At the same time, Aerostar fully complies with the requirements of law 129/2019 regarding the real

beneficiaries. In relation to the significance thresholds provided in the legislation specific to the capital

market, there is no data available on

cross board membership

or about shares held by suppliers and other

interested parties in Aerostar’s shareholding structure. The evaluation of

the BoD members’ performance is carried out in accordance with the provisions of the Internal

Regulations of the Board of Directors.

In the wake of the evaluation carried out, based on these statements, it was found out that:

BOD member is an independent member;

no member is in conflict of interest with the position he holds in the Board of Directors;

measures or changes are required in the Board of Directors.

Executive management

AEROSTAR is managed in a unitary system, with the executive management of the company delegated

to the General Director and to the Financial Director.

Internal control system

The internal control system of AEROSTAR comprises the following components: Financial

management control

Budgetary control

Controlling Internal

Management control

There is a department in AEROSTAR that performs the tasks of financial management control. It ensures

theinventoryof allitems of thenatureof assets, liabilities and equityinthecompany’s records. Throughout

this period of time the inventory activity was performed in compliance with the legal provisions and

company regulations. The results of the inventory processes were registered in the company’s accounting

records. No significant deviations were found compared to the records on paper.

Budgetary control

The budgetary control is carried out by budget managers. From a budgeting perspective, the company

is organized on:

Various budgets are defined in the company based on activity programs corresponding to the functions of

The budgetary control ensures:

compliance with the forecasted values for each budgeted indicator

groundwork for any corrective actions

On a quarterly basis, both the profit centres and the cost centres report to the executive

management the methods for achieving the budgetary forecasts and the necessary, timely, efficient,

effective and legal nature of the expenses incurred by the company.

In AEROSTAR, the concept of controlling has been implemented and continuously developed

as a higher stage of budgetary control. Controlling also ensures alignment with the company’s

mission and strategic goals.

The company has in place an Internal Audit team with members registered in the Romanian Chamber of

Financial Auditors. AEROSTAR’s internal auditing activity is organized according to law, as a distinct

department in the organizational structure, in accordance with the organizational chart.

The internal audit is directly subordinated to the Board of Directors and is an independent and objective

activity of enforcement and consultancy, designated to evaluate and improve the company’s operations.

The internal auditing activity is conducted based on the annual activity program approved by the Board of

The internal audit missions have confirmed the positive impact of the internal audit activity on the overall

activity performed in the AEROSTAR.

The internal audit reports are periodically submitted at the meetings of the Board of Directors and to

the Audit Committee.

Table on compliance with the Corporate Governance Code 2022

Reason for non-compliance

Three of the five BoD members are non-executive. The Board of

Directors does not include an independent member, this

being voted by the General Meeting of the Shareholders.

During 2022, 9 meetings took place, of which:

In 2 meetings all the BoD members were present;

In 1 meeting 4 members were present, while the fifth member was absent; In 6

meetings 3 members were present, the other 2 being absent.

The company has set up an independent audit committee in accordance with

art. 65 of the Law no. 162/2017

The members of the audit committee are independent persons elected by the

General Meeting of the Shareholders and have competencies in the accounting

and statutory audit field.

All the GMS resolutions regarding the remuneration of the BoD

members were published. Currently there is a distinct section in

the BoD Regulation.

The information in this section is available, upon request, but it is

not published on the company’s website.

RISK MANAGEMENT

The risk management process involves the systematic implementation of procedures and practices in

the communication and consulting activities, the assessment, handling, monitoring, reviewing, recording

and reporting of risks. The risk management process is conducted in a manner that ensures the handling of

risks so as to eliminate them or to secure the agreed level of risk.

In Aerostar, the risk management is a continuous process that is carried out in order to evaluate risks and

handle them, to identify new risks that never occurred and to reassess the risks that reoccur.

Within the company are allocated all necessary resources for risk management and are established

the authorities and responsibilities for the relevant functions and levels. The general framework for risk

management relies on understanding the interested parties’ needs and expectations in obtaining the

organization’s forecasted results.

In order to identify the risks related to quality and environment, the internal and external context of the

company was taken into account, as well as the relevant requirements of the interested parties, the

activities with impact on the environment and the compliance obligations applicable to them.

and their management

The risks identified by AEROSTAR are in a limited number, grouped according to the degree of probability

of occurrence. The risk profile of this period is uncertain.

Risks related to geopolitical and economic instability

Among the many negative effects of an escalation of the war in Ukraine are the rising costs, the export

restrictions, theinternationalsanctions and therisingmilitarytensions around theworld. At thesame time,

theincrease inprocurement costs, raw materials and materials induce pressure on the manufacturing costs.

We maintain our pro-active policies, while continuously monitoring and analysing the main conflict areas.

Risks related to the workforce

It is a priority to make sure that AEROSTAR can attract, develop and retain a competent, motivated and

flexible workforce that fits the current and future requirements. The workforce is becoming a challenge

forthe future, given the need for qualified staff with advanced skills in new technologies.

As measures for handling this risk, AEROSTAR develops partnerships with pre-university and university

education institutions, organizes internships for students from specialized institutions, grants dual

scholarships to students from the dual vocational education.

Risks related to pandemic

The COVID-19 pandemic was oneof the most profound challenges inthe historyof ourcompany. The impact

of the pandemic on both the social and economic aspects and the changes thus generated require

preventive management in relation to all components and functions of the organization. Our top

management believes that there are no uncertainties about the ability to continue working in the event of

further successive pandemic waves.

The exposure to other types of risks is presented in Note 18 – Financial instruments.

Given the global political turmoil, in the future we can face new types of risks that can affect our business,

operations results and financial situation. Additional risks and uncertainties that are not currently known to

the company or that are currently considered to be insignificant may also affect its businessand

operations.The Companystrives to minimize risk to theextent reasonably possible.

The trend of main risks

and uncertainties for the

The aviation industry is a dynamic sector with rapid changes, in a period of uncertainty. The company’s

prospects depend largely on the global context and the evolution of key factors. The pandemic situation as

well as the global economic and geopolitical crisis have not changed AEROSTAR’s commitment to its

established responsibilities. The conflict between Ukraine and Russia did not directly affect the company’s

business, but the resulting inflationary effects are a continuing concern for the company.

Next, the company’s management aims to secure medium and long-term sustainability and to reduce the

uncertainty associated with its strategic objectives and focuses on mitigating the consequences of the

economic and financial imbalances.

The results of 2022 reflect the company’s solid performance, with a growth in sales and an increase in the

number of employees, in the context of the complex geopolitical and economic environment. The financial

performance increased by 24% in turnover compared to the same period of last year, reflects resilience and

a stable framework of the company in relation to the business environment.

NON-FINANCIAL STATEMENT

in sustainability

The non-financial statement along with the sustainability information presented in this report,

reflect the company’s commitment, values and objectives, set for a sustainable business and for

reaching a balance between the shareholders’ expectations, the needs and concerns of our

employees, members of our community and all stakeholders.

We believe that our responsible actions will contribute to lasting economic success. By pursuing

sustainable development, we are moving toward a safer future.

We are guided by responsibility for sustainable development, we consistently apply the best

practices in the field, in accordance with the practices of our business partners, we provide

transparent information, explanations and data from these categories of financial and non-

financial information.

Meeting our customers’ requirements, full safety for the users of our products and services,

continuous improvement and increasing the environmental performance are the principles by

which we guide ourselves in our business.

Our sustainability goals, correlated with the business environment and global evolution have

been integrated in our company’s overall long-term strategy.

We are committed to being a top Employer!

In this regard, we plead for an inclusive culture in which each person can fulfil his or her potential

and contribute through their individual perspectives. We are convinced that the diversity of our

workforce and our organizational culture have a positive impact on the success of our business and

the evolution of the company.

We are committed to strengthening our culture and the diversity of our workforce by attracting,

retaining and developing our employees professionally, by developing partnerships to attract

young people to internships and study.

We take action against all forms of discrimination, we build teams with a balanced age structure

and a diverse foundation of educational backgrounds and experience, and we create a balanced

working environment. Our skills matrix shows how managers and employees can create an

adequate environment through open collaboration and support.

We are fully committed to ensuring business continuity while protecting the health and safety of

our colleagues.

We respect the environment, nature and natural resources!

We see climate change as a challenge and a threat to the environment, with an impact on society

This can lead to uncertainties for planning, investment and strategies. Legal regulations and

provisions also evolve in an attempt to encourage eco-friendly behaviour.

We believe that everyone’s efforts must be consistent. We also believe that our actions to

mitigate climate change and to ensure energy efficiency will bear fruit in the long term.

Respect for the environment is at the heart of sustainable behaviour. In this regard, we monitor

greenhouse gases and carry out analyses compared to the previous years, we establish actions to

reduce consumption and we make investments that will be a long-term benefit.

We continue to commit ourselves to protecting all natural resources by responsibly using water

and energy, to reducing greenhouse gas emissions, waste from activities, to reducing the use of

chemicals, materials and processes that have a negative effect on the environment, and to

improve and develop the company’s locations in such a way as to avoid any negative

environmental impacts.

We see improvements in our indicators from year to year. This is only possible by respecting our

assumed commitment. We arecommitted to communicating our environmental policy and

strategy to all stakeholders and, where possible, to exceed the requirements of the applicable

regulations and standards.

We are committed to building a sustainable future!

We fully comply with the national and international standards and regulations applicable to the

environmental, social and personnel aspects, human rights, fighting corruption and bribery, and

promoting diversity.

The pandemic situation and the global economic crisis have not altered our commitment and

have not caused any impact on the compliance of our company with its established

responsibilities.

In our company, the Board of Directors determines the strategic orientation and ensures its

implementation. At the same time, the Board of Directors is also responsible for ensuring

compliance with all applicable legal provisions, the company’s internal regulations, as well as the

proper risk management and control.

The executive management closely coordinates the activity of the departments that are duly in

charge with the economic, environmental and social aspects.

In our company:

The responsibilities for the quality and environmental aspects, as well as the risk management,

are assigned/delegated to the Quality and Environmental Director.

The responsibilities for the social, manpower, occupational health and safety aspects, the fight

against discrimination and the promotion of diversity are allocated/delegated to the Director of

Human Resources.

The responsibilities for compliance with the legislation on human rights, fighting corruption and

bribery are assigned/delegated to the Legal Department.

The responsibilities regarding the sustainable use of resources and the reduction of energy

consumption are allocated/delegated to the Utilities & Infrastructure Division Director.

The responsibilities regarding the measures of enforcement in relation to money

laundering prevention are assigned/delegated to the Finance-Accounting Director.

The corporate governance responsibilities are assigned to the general secretariat of the

The regulatory framework established by AEROSTAR for compliance is based on:

* The Management System in place at AEROSTAR, the Quality and Environmental Management System and

the Occupational Health and Safety Management System respectively, certified in AEROSTAR in accordance

with the requirements of the standards ISO 9001, ISO 14001, AS EN 9100, AQAP 2110 and ISO 45001:2018,

* AEROSTAR customers’ requirements

* The guidelines described in the international standard ISO 26000 * The

regulatory framework provided by the Romanian legislation

* The guidelines described in the Communication from the European Commission regarding the reporting

of nonfinancial information

* The guidelines described in the Global Reporting Initiative (GRI) standards, without recording and

declaring the compliance with them.

Performance indicators

We are continuously monitoring the progress of the proposed commitments!

1. CLIMATE CHANGE MITIGATION Reduction of

atmospheric greenhouse gas emissions Reduction of

volatile organic compound emissions Increase of the

percentage of waste recovery

Reduction of electricity consumption/production of electricity

from renewable sources

Total amount of water discharged to the

29 hours of training/

34 hours of training/

2.TOP EMPLOYEER

Training employees in professional development (number of

internal and external training hours/employed per year)

Ensuring the health and safety of employees (number of

accidents per 100,000 hours worked)

Diversity and inclusion/share of women in Aerostar

Number of women in the management structure

3. INVOLVEMENT IN THE COMMUNITY AND ITS

Developing partnerships to attract young people

in internships and study

Individual employment contracts concluded for an indefinite

Performance indicators in accordance with the strategic objectives presented at page

with reporting requirements non-

The annual report for the period 1 January - 31 December 2022 was prepared in accordance with the

framework set out in Law 24//2017, ASF Regulation No 5/2018 on issuers of financial instruments and

market operations – Annex 15, the applicable reporting requirements and the Guidelines described in the

Communication from the European Commission.

The annual report is accompanied bythe statement on non-financial reporting issues, the “apply or explain”

statement of compliance with the Bucharest Stock Exchange Corporate Governance Code and the individual

financial statements of Aerostar.

Section in the Annual Report

Non-financial reporting requirementsPage

Corporate governance

Non-financial statement

Our strategy and business model

Context of the organization and stakeholders

Non-financial statement45

Business model, the context of the organization20

and stakeholders23

Quality and environment

Quality and environment

Quality and environment

Quality and environment

Quality and environment

Principles and values, conduct

Corporate governance

Quality and environmental policy32

Improving the environmental performance32

Improving the performance in the field of34

pollution prevention

Climate change mitigation35

Sustainable use of resources35

Principles and values, Code of Ethics and37

Business Conduct

Sustainable development45

Social and personal aspects 17

Promoting diversity 17

Corporate governance

Corporate governance

Corporate governance

Risk and opportunity management

Corporate governance

Human rights and the fight against corruption17

and money laundering17

Corporate governance37

Risk and opportunity management43

SUMMARY OF FINANCIAL STATEMENTS 2022

Financial performanceUM

Total income k lei

Total costs k lei

Gross profit k lei

Financial positionUM

Non-current assetsk lei

Current assetsk lei

Share capital k lei

Total debtk lei

Identification data and field of

004-0234 575070/

004-0234 572023;

Reporting period:

31 December 2022

AEROSTAR S.A. company founded on April 17, 1953 by the Council

of Ministers’ Decision no. 1165.

The company activities take place at the registered office,

which is located at no. 9, Condorilor Street, Bacau, postal code

Since January 2018, AEROSTAR has registered a secondary office, a

workplace on the perimeter of the International Airport of Iasi;

The unique European company identification code (EUID) is

ROONRC.J04/1137/1991, and the LEI identification code of the legal

entity is 315700G9KRN3B7XDBB73;

The main field of activity of the company is production. The

main object of activity of the company is the

“manufacture of aircraft and spacecraft” - NACE code 3030;

Subscribed and paid-up share capital: 48.728.784 RON; Applicable

accounting standards: The individual financial statements are

prepared in accordance with the provisions of

theInternationalFinancialReportingstandards(IFRS)adopted by the

European Union, Accounting Law no. 82/1991,

republished,asamendedand supplemented,andarepresented in

accordance with the requirements of IAS1, order 2844/2016 for

the approval of accounting regulations in accordance with the

International Financial Reporting standards.

The basis for preparing and presenting the financial

statements are presented in Note 3;

The individual financial statements prepared for 2022 are

accompanied by the independent financial auditor’s report;

AEROSTAR S.A. is listed on the Bucharest Stock Exchange under

the ARS code and the stock and shareholders records are kept,

according to the law, by S.C. Central Depository S.A. Bucharest;

www.aerostar.ro

aerostar@aerostar.ro

Contact us: AEROSTAR

9, Condorilor Street, Bacau - 600302, Romania tel:+40 234 575070

e-mail: aerostar@aerostar.ro, www.aerostar.ro

AEROSTAR S.A. BACĂU

INDIVIDUAL FINANCIAL STATEMENTS

FOR THE YEAR ENDED ON 31 DECEMBER 2022

Prepared in accordance with

Order of the Minister of public Finance no. 2844/2016, for the approval of

accounting regulations in accordance with the International Financial

Reporting standards

THE INDIVIDUAL SITUATION OF PROFIT OR LOSS

OTHER COMPREHENSIVE INCOME

THE INDIVIDUAL FINANCIAL POSITION

THE INDIVIDUAL STATEMENT OF CASH FLOWS

THE INDIVIDUAL SITUATION OF CHANGES IN EQUITY

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

AEROSTAR S.A. BACĂU

INDIVIDUAL STATEMENT OF PROFIT OR LOSS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

Operating income

Sales revenue Other

Revenue related to stocks of finished products and

production in progress

Income from the production of assets

Income from operating subsidies

Total operating income

5;6;20 (24.105)

Operating costs

Material expenses

Expenses on employee benefits

Depreciation expenses of assets

Net income (expenses) from adjustments on current

Net income (expenses) from adjustments to

Expenditure on external benefits

Total operating expenses

Profit/loss from operating activity83.37963.823

Financial income

Financial expenses

Financial profit/loss

Profit before tax

Current and deferred income tax17;23(9.398)(9.708)

Net profit of the period

General Director,

Financial Director,

AEROSTAR S.A. BACĂU

INDIVIDUAL STATEMENT OF OTHER COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022 (all

amounts are expressed in thousand lei, unless otherwise specified

Net profit of the period

Deferred income tax recognized on account equity

Revaluation at fair value of equity instruments through

other elements of the global result

Other elements of the global result

Total global result of the period

General Director,

Financial Director,

AEROSTAR S.A. BACĂU

INDIVIDUAL STATEMENT OF THE FINANCIAL POSITION FOR THE FINANCIAL

YEAR ENDED ON 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified)

Note 31 December

Non-current assets

Property, plant and equipment

Intangible assets

Investment property

Rights to use the assets under lease

Financial assets

Receivables regarding deferred profit tax

Total non-current assets

Trade receivables and other receivables

Short-term prepaid expenses

Cash and cash equivalents

Total current assets

COMPANY EQUITY AND LIABILITIES

Capital and reserves

Result carried-forward

Deferred income tax recognized on account of equity

Distribution of profit for legal reserve

Long-term liabilities

Liabilities regarding deferred income tax

Subsidies for long-term investments

Other long-term liabilities

Total long-term liabilities

Long-term provisions

Current liabilities

Trade liabilities

Liability with current income tax

Subsidies for short-term investments

Other current liabilities

Total current liabilities

Short-term provisions

Total provisions Total

Total company equity, liabilities and provisions

General Director,

Financial Director,

AEROSTAR S.A. BACĂU INDIVIDUAL

STATEMENT OF CASH FLOWS FOR

FINANCIAL YEAR ENDED ON 31 DECEMBER 2022 (direct method)

(all amounts are expressed in thousand lei, unless otherwise specified)

General Director,

Financial Director,

NET CASH FROM OPERATIONS

NET CASH FROM INVESTMENTS

CASH FLOWS FROM OPERATIONS

collected from customers

taxes and excises recovered from State Budget

collected as subsidies from the State Budget

payments to suppliers and employees

payment of taxes, contributions and dues to the

payment of profit tax to the State Budget

CASH FLOWS FROM INVESTMENTS

interest collected from bank deposits set up

dividends collected from other entities

dividends collected from related entities

collected from selling tangible assets

payments for purchasing fixed assets

payments for purchasing tangible and non-

tangible fixed assets

CASH FLOWS FROM FINANCING

gross dividends paid

NET CASH FROM FINANCING

Net increase/decrease of cash and cash

Cash and cash equivalents at the beginning

Effect of the exchange rate variation on cash

and cash equivalents

Cash and cash equivalents at the end of the

AEROSTAR S.A. BACĂU

INDIVIDUAL SITUATION OF CHANGES IN EQUITY FOR

THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(all amounts are expressed in thousands lei)

financial assets

elements of the

A. Balance on 1 January 2022

Profit of the period

Other elements of the global result

Setting up of deferred profit tax recognized on

account of equity

Distribution of the profit of the year 2021 to the

destinations decided by the shareholders in

OGMS of 20 April 2022 (Note 12)

Revaluation at fair value of the equity

instruments through other elements of global

Distribution of the profit made for tax facility

reserves into gross amounts

Transfer to reserves of retained earnings

representing surplus from revaluation reserves

Total global result related to the period

Reserve distributed from the profit of the year

Distributed dividends related to the year 2021

Transactions with the shareholders,

recognized directly in equity

B. Balance on 31 December 2022

C. Modifications of equity (Note 12)

*) The result of 59,940 thousand lei on 31.12.2021 is influenced by the distribution of the profit on other reserves from tax facilities in the amount of 5,660 thousand lei;

**) The result of 90,273 thousand lei on 31.12.2022 is influenced by the distribution of the profit on other reserves from tax facilities in the amount of 7,961 thousand lei.

General Director,

Financial Director,

AEROSTAR S.A. BACĂU

INDIVIDUAL STATEMENT OF THE CHANGES IN COMPANY EQUITY

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2021

specified otherwise, all amounts are stated in thousand lei

Deferred income tax

recognized on equity

A. Balance on 1 January 2021

Profit of the period

Other elements of global result

Set up deferred income tax recognized on the account of equity

Distribution of the profit of 2021 for reserves from fiscal

facilities, in gross amount

Transfer to reserves of similar items of income from the year 2021

Total global result relating to the period

Distribution to other reserves of the net profit of the year 2020

Distribution of the profit of the year 2020 to the destinations

decided by the shareholders in OGMS of 21 April 2021 (Note 12)

Distributed dividends related to the year 2020

Transactions with the shareholders, directly recognized in

B. Balance on 31 December 2021

C. Modifications to own equity (Note 12)

*) The result of the prior period is 26.361 k lei and is influenced by the distribution of the profit on the legal reserves in the amount of 12.082 k lei;

**) The result on 31.12.2021 is 59.940 k lei and is influenced by the distribution of the profit on the legal reserves in the amount of 5.660 k lei;

General Director,

Financial Director,

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

NOTE 1 - DESCRIPTION OF THE COMPANY

AEROSTAR was founded in 1953 and operates in accordance with Romanian Law. AEROSTAR

S.A. performs its activity at its registered head office located in Bacau, 9,

Condorilor Street, code 600302. In accordance with the Agreement no. 2/14.12.2017 of the Board of

Directors, a secondary place of business without legal personality (workplace) has been approved in

Iasi, on 25B Aeroportului Street.

The main field of activity of AEROSTAR is production.

The main object of activity of the company is “Manufacture of aircraft and spaceships” -code

The company was registered as a shareholding company at the Bacau Trade Register (under

number J04/1137/1991), with the current name “AEROSTAR S.A.” and the individual

identification code 950531, the European Unique Identifier (EUID) code ROONRC J04/1137/1991.

The company is listed on the Bucharest Stock Exchange under THE ARS code, and the stock

and shareholders record is kept, according to the law, by S.C. Central S.A. Depository Bucharest.

During 2022, there was no subscription of new shares, nor of any participation certificates,

convertible bonds, warranties, options or similar rights.

In terms of accounting regulations, AEROSTAR S.A. is a subsidiary of IAROM S.A. and

therefore the parent company that consolidates the financial statements of the group is IAROM S.A.,

with the unique identification code 1555301 and the registered office in Bucharest, 39, Aerogarii

Blvd. The consolidated financial statements for the financial year 2021 were submitted to A.N.A.F.

under registration no. 429231916-2022/30.08.2022. Copies of the consolidated financial statements

can be obtained from the head office of the parent company, IAROM SA. The parent company will

prepare and publish a set of consolidated financial statements in accordance with the applicable

accounting regulations for the financial year ended 31.12.2022.

The company has a sole business segment under IFRS 8 and no distinct financial information is

available for various components of the entity. The information on sales by business lines and markets

is detailed in the Board of Directors’ Report.

The management policy is focused on maintaining a solid capital base in order to support the

continuous development of society and the achievement of its strategic objectives.

The company will continue to act firmly to ensure the sustainability of investments and the

preservation of production capabilities. At the same time, thanks to the experience gathered in our

collective, the company acts in order to find the most suitable solutions to solve the new economic

challenges, such as the lack of predictability of the energy costs and the workforce instability.

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

NOTE 2 - ESTIMATES, ASSUMPTIONS AND ACCOUNTING

The preparation and presentation of individual financial statements in accordance with IFRS

requires the use of estimates, judgments and assumptions that affect the application of accounting

policies as well as the reported value of assets, liabilities, income and expenses.

Estimates and judgments are made based on historical experience, as well as on a series of

factors considered adequate and reasonable. The accounting estimates and judgments are

continuously updated and they take into account reasonable expectations of likely future events. The

reported carrying amounts of the assets and liabilities that cannot be determined or obtained from

other sources are based on these estimates considered appropriate by the top management of the

Such estimates, as well as the reasoning and assumptions behind them are reviewed

periodically, and the result thereof is recognized during the period when the estimate was reviewed.

Any change in accounting estimates will be recognized prospectively by including it in the result:

-of the period during which the change takes place, if it affects onlythat period; or

-of the period during which the change takes place and of the subsequent periods, if the change

also has effect on them.

The company uses estimates to determine:

the uncertain customers and the adjustments for impairment of the related receivables;

the value of risk and expense provisions to be set up at the end of the period (month, quarter, year)

for litigations, for decommissioning of property, plant and equipment, for guarantees to customers,

for staff obligations and other obligations;

the adjustments for impairment of tangible and intangible assets. At the end of each reporting

period, the company estimates whether there are sign impairment indices. If such signs are

identified, the recoverable amount of the asset is estimated to determine the extent of

impairment (if any);

the lifetimes of tangible and intangible non-current assets. The company reviews the estimated life

of tangible and intangible non-current assets at least at each end of the financial year in order to

determine their adequacy;

the inventories of raw material and materials that require the setting up of impairment

deferred taxes.

Presentation of information

To the extent possible, the company will disclose the nature and value of a change to an

accounting estimate which has an effect in the current/subsequent period(s).

Errors may arise with regard to the recognition, measurement, presentation or description of

the elements of the financial statements.

The company corrects retroactively the significant errors of the previous period in the first set

of financial statements approved for publication after discovering the errors, by:

-restating the comparative values for the previous presented period when the error occurred, or

-if the error occurred before the earliest period presented, by restating the opening balances of

assets, liabilities and equity for the prior period presented.

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

In case of identifying an error, the company presents the following information: -

the nature of the error of the previous period;

- for each previous period presented, insofar as possible, the value of the adjustment: •

for each item – row affected in the financial situation;

• for the basic and diluted results per share.

- the amount of the correction at the beginning of the earliest period presented;

- if retroactive restatement is impossible for a specific previous period, the circumstances

leading to that condition and a description of how and when the error was corrected.

2.3. Changes in the accounting policies

Changes in the accounting policies are permitted only if required by IFRS or if they result in

more relevant or credible information about the company’s operations.

The company changes an accounting policy only if such change: -

is required by an IFRS; or

-results in financial statements that provide reliable and more relevant information about the

effects of transactions, other events or conditions on the entity’s financial position, financial

performance or cash flows.

Application of changes in accounting policies:

-The entity accounts for a change in the accounting policy that results from the initial

application of an IFRS in accordance with the specific transitory provisions, if any, of that

-Upon the initial application of an IFRS that does not include specific transitory provisions.

Presentation of information

When the initial application of an IFRS has an effect on the current or previous periods, the

company discloses in the explanatory notes the following:

-the title of the IFRS;

-the nature of the change in accounting policy;

-where applicable, the fact that the amendment is made as an effect of the transitional

provisions and a description of those transitional provisions;

-for the current period and for each preceding period presented, the sum of adjustments for

each affected item in the statement of financial position, to the extent possible.

When it is impossible to determine the specific effects for one or more previous periods

presented, the Company will apply the new accounting policy to the carrying amount of assets and

liabilities for the first period for which the retroactive application is possible, which may be the current

Where a voluntary change in the accounting policy has an effect on the current or previous

period, the company shall present in the explanatory notes:

-the nature of the change in accounting policy;

-the reasons why the application of the new accounting policy provides reliable and more

relevant information;

-for the current period and for each preceding period presented, the estimated amount of

adjustments for each affected item of the statement of financial position, to the extent possible.

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

NOTE 3 - ACCOUNTING AND EVALUATION PRINCIPLES

3.1. Basis for the preparation and presentation of financial statements

The individual financial statements of Aerostar SA are prepared in accordance with the

The International Financial Reporting standards (IFRS) adopted by the European Union:

New or revised standards adopted for the first time:

1. Adoption of amendments to IFRS 1 “First-Time Adoption of International Financial

Reporting Standards”, IFRS 9 “Financial Instruments”, IAS 41 “Agriculture” and illustrative

examples of IFRS 16 “Leasing”;

2. Adoption of amendments to IFRS 3 "Business combinations";

3. Amendment to IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’ (the

amendment refers to onerous contracts);

4. Adoption of amendments to IAS 16 „Property, plant and equipment”.

The amendments enter into force for annual reporting periods beginning on or after 1 January

2022. These changes did not have a significant impact on the Company’s financial statements.

Standards (amendments to standards) and interpretations adopted by the

International Accounting Standards Committee and the European Union through

Regulations issued but not entered into force:

1. The entry into force of IFRS 17 “Insurance Contracts” introducing a new international

approach to accounting for insurance contracts;

2. Amendments to IAS 1 “Presentation of Financial Statements”. The amendments relate to the

classification of liabilities as current or long-term liabilities and the presentation of accounting

3. Amendment to IAS 8 "Accounting Policies, Changes in Accounting Estimates and

Errors" introduces the definition of Accounting estimates;

4. Amendments to IAS 12 “Income Taxes”.

The amendments enter into force for annual reporting periods beginning on or after 1 January 2023.

The company assesses the potential effects of the new standards and amendments on the

International Financial Reporting standards and, according to the initial estimates, it predicts that they

will not have a significant impact on its financial statements.

Accounting Law No. 82/1991, republished, with subsequent amendments and completions;

O.M.F.P. No. 881/2012 on the application of the International Financial Reporting Standards by

companies whose securities are admitted for trading on a regulated market;

O.M.F.P. No. 2.844/2016 for the approval of accounting regulations in accordance with the

International Financial Reporting standards with subsequent amendments and completions;

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

O.M.F.P. No. 2.861/2009 for the approval of the Norms on the organization and carrying out of

the inventory of items such as assets, liabilities and equity;

O.M.F.P. 1.826/2003 for the approval of the specifications regarding certain organizational and

management measures for management accounting;

O.M.F.P. no. 2.634/2015 on financial accounting documents, with subsequent amendments and

The accounting is kept in Romanian and in the national currency.

The accounting of operations performed in foreign currency is kept both in national currency and

in foreign currency.

The financial year is the calendar year.

The financial statements are prepared and reported in thousands of lei and all values are rounded

to the nearest thousand lei. Due to rounding, the numbers shown do not always accurately reflect the

totals submitted and the percentages do not accurately reflect absolute figures.

The financial statements are prepared on the basis of historical cost.

The financial statements are presented in accordance with the requirements of IAS 1

Presentation of Financial Statements. The company opted for a presentation by nature and liquidity in

the statement of financial position and a presentation of the revenues and expenses by nature in the

statement of profit or loss, considering that these presentation methods provide information that is

relevant to the company’s situation.

3.2. Applied accounting policies

Aerostar S.A. describes the accounting policies applied in the notes to the individual

financial statements and avoids repeating the text of the standard, unless it is considered relevant

to understanding the content of the note.

The most significant accounting policies are presented below:

•Accounting policies for assets

The company chose the cost-based model as its accounting policy. After recognition as an asset,

the property, plant and equipment are accounted for at their cost less the cumulative depreciation and

any cumulative impairment losses.

The depreciable amount is allocated systematically over the useful life of the asset and

represents the cost of the asset minus the residual value.

Taking into account the specific activity and the types of assets in the company’s patrimony, it was

considered that the residual values of the assets are insignificant. In practice, the residual value was

calculated at the level of the value of the recoverable metal waste, after deducting the costs of

dismantling, disassembly and sale.

The depreciation methods and useful lifetimes are reviewed at least at the end of each financial year

and adjusted accordingly. The useful lifetimes are determined by committees made up of specialists

from the company. Any changes to them shall be accounted for prospectively.

Subsequent expenditures related to property, plant and equipment are added to the carrying

amount of the goods when:

-they have the effect of improving the initial technical parameters;

-they are sources of future economic benefits materialized by cash flows supplementary to

those estimated initially; and

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

-they can be assessed reliably.

Benefits are achieved directly by increasing the revenues and indirectly by reducing the

maintenance and operating expenses.

All other expenses for repairs and maintenance carried out for the purpose of ensuring the continued

use of the assets are recognized in the statement of profit or loss at the time of making them. They are

made in order to preserve the initial technical parameters.

Spare parts are generally accounted for as inventories and recognized as expenses when

consumed. If the spare parts and service equipment of significant values can only be used in connection

with an item of property, plant and equipment, they shall be accounted for as property, plant and

equipment if the initial purchase value (upon commissioning) of the replaced part can be determined.

In order to decide whether the recognition is made separately, on separate components, each case

is analysed using professional reasoning.

The property, plant and equipment in progress to be used in production or in administrative

activities shall be presented in the statement of financial position at cost less any loss accumulated from

impairment. Such assets are classified in the respective categories of assets when they are completed

and ready for use in the manner desired by management for the intended purpose.

The management of the company has set a cap on the capitalization of assets at 2,500 lei. All

purchases below this amount will be considered expenses of the period.

Exceptions: Computers are considered to be depreciable property, plant and equipment

irrespective of the input value and shall be amortized over the useful life determined by the receiving

commission. Tools and work devices are also accounted for as stocks and recognized as expenses of the

period when consumed, irrespective of their input value, taking into account that they have a useful

lifetime usually less than one year, as well as their degree of specialization (are intended to be used for a

particular type of product/service).

In case of internally generated intangible assets, the phases of accomplishment are clearly

separated, namely:

• The research phase. The research costs are treated as expenses of the period;

• The development phase. Development costs are recognized as an intangible asset if the

following conditions are demonstrated:

- the technical feasibility of completing the asset so that it is available for use or sale;

- the availability of adequate resources – technical, financial, human to complete the

- the intention to complete and use or sell the intangible asset; -

the ability to use or sell the asset;

-how the asset will generate future economic benefits; -

the ability to assess costs.

If the company cannot distinguish between the research and development phase of an internal

project to create an intangible asset, the company treats the project costs as being incurred

exclusively during the research phase.

The company has chosen as its accounting policy the cost-based model that requires that the

intangible assets be valued at their net book value equal to their cost less the cumulative

depreciation and any impairment losses recorded on those assets.

A real estate investment is initially valued at cost, including any other directly attributable

expenses. After the initial recognition, the company opted for the cost model for all its real estate

investments in accordance with the provisions of IAS 16 for that model.

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

Transfers into and out of the property investment category are made only if there is a change in

Transfers between categories do not change the carrying amount of the transferred immovable

property or the cost of that property for the purposes of evaluation or disclosure of information.

Real estate investments are amortized according to the same rules as property, plant and

In the category of financial assets are recorded: -

shares held in affiliated companies;

- other fixed-income securities;

- long-term loans and interest on them. This category includes the amounts granted to third parties

based on interest-rate contracts, according to the law;

- other non-current receivables and related interest. This category includes collaterals, deposits

and securities placed with third parties, and claims related to leasing contracts.

Financial assets recognized as an asset are measured at the cost of purchase or at the value

determined in their acquisition contract.

Financial assets are presented in the statement of financial position at the input value less any

recognized impairment losses.

•Accounting policies for items of inventory nature

The inventories are recorded on the date of transfer of risks and benefits.

The calculation of those stocks that are not usually fungible and of the resulting goods or services

is determined through the specific identification of their individual costs.

When the stocks and fungible assets are removed from the inventory, they are assessed and

recorded in the accounts by using the FIFO method.

Periodically, the management of the company approves the level of normal technological losses.

The inventory is kept based on quantity and value, by applying the method of permanent

Value adjustments are made for current assets such as stocks at each reporting period, based on

the age of inventories, the findings of the inventory boards and/or the heads of the profit centres, in

order to present the assets at the lowest value between cost and net achievable value.

•Accounting policies on the company’s liabilities

The company’s liabilities are recorded in the accounts on behalf of third parties’ accounts. The

accounts of suppliers and other liabilities are kept per category, as well as per natural or legal person.

Income tax is recognized as a liability within the limit of the unpaid amount.

The excise duties and special funds included in prices or tariffs are recorded in the accounts based

on the corresponding liabilities accounts, without transiting through the accounts of income and

The operations that cannot be recorded separately in the corresponding accounts and for which

further clarification is required are recorded in a separate account 473 ‘Accounts settled from

operations under clarification’.

Foreign currency liabilities are recorded in the accounting both in lei and in foreign currency.

A liability is classified as a short-term liability, also called a current liability when:

it is expected to be settled in the normal course of the company’s operating cycle, or

it is due within 12 months from the balance sheet date.

All other liabilities are classified as long-term liabilities.

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

Liabilities that are outstanding over a period of more than 12 months are long-term liabilities.

They are also considered long-term interest-bearing liabilities even when they are due within 12

months of the date of the financial statements, if:

a) the initial deadline was for a period of more than 12 months; and

b) a refinancing or rescheduling agreement is in place, concluded before the date of the financial

•Accounting policies on the company’s receivables

Receivables include:

- trade receivables, which are amounts due by customers for goods sold or services rendered in

the normal course of business;

- commercial effects to be collected, third-party instruments; -

amounts owed by employees or affiliated companies;

- advances granted to suppliers of assets, goods and services; -

receivables related to manpower and state budget.

Receivables are accounted for under the accrual basis, according to the legal or contractual

Customers’ booking is kept by categories (internal customers for services and products, and

external customers for services and products) and for each natural or legal person.

Receivables settled in foreign currency or in lei according to the foreign exchange rate.

Receivables in foreign currencies, which are the result of the company’s transactions, are

recorded both in LEI, and in foreign currency.

The transactions in foreign currency are initially recorded at the foreign exchange rate,

communicated by the National Bank of Romania, on the date of performing the operation.

The removal from accounting of the receivables with prescribed collection deadlines is

performed only after all legal steps have been taken for their settlement.

The uncertain receivables are recorded separately in accounting, in the account 4118 Uncertain

customers when the due date stipulated in the contract is exceeded by more than 30 days or when a

dispute with the client has been registered.

In the annual financial statements, receivables are valued and presented at the value at which they

are likely to be received.

When a receivable from a client has not been collected in full at the due date set in the contract,

impairment adjustments are recorded at the terms and percentages approved by the Board of

Directors in the Accounting Policy Manual.

•Accounting policies for revenue recognition

Income is recognized in the statement of profit or loss of the company when an increase in future

economic benefits linked to an increase in an asset or a decrease in debt can be reliably measured. As

a result, recognition of revenue occurs simultaneously with recognition of asset growth or debt

The revenue category includes both the amounts collected or receivable on their own behalf and

the gains from any source.

Income is classified as follows:

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

• Operating income;

• Financial income;

The revenue is recognized on an accrual basis.

Synthetic income accounts are developed on analytical accounts, according to the accounting

regulations in force (general plan of accounts) and according to the company’s own needs, with the

approval of the top management.

The income is measured at the fair value of the consideration received or receivable. Sales

revenue is diminished for returns, trade rebates and other similar discounts.

Operating income includes:

- sales revenue related to contracts with customers (goods, services, goods, waste products); -

income related to the cost of the stocks of products;

- income from the production of assets;

- income from readjustments of the assets, i.e. from decreases or repayments of provisions; -

other operating income.

Revenue from contracts with customers is recognized under IFRS 15 “Revenue from Contracts

with Customers”. The Client is a party that has entered into a contract with the Company to obtain

goods and services resulting from the ordinary activities of the Company.

Revenue recognition describes the transfer of control over goods and services to customers and

their assessment reflects the consideration to which the company is expected to be entitled in exchange

for those goods and services.

Control, in accordance with paragraph 33 of IFRS 15, includes the ability to prevent other entities

from determining the use of the asset and obtaining benefits from it. The benefits of an asset are

potential cash flows that can be obtained directly or indirectly through the use, sale or holding of the

Income recognition is the result of completing the following five levels:

Identification of the contract with a customer

The company accounts for a contract with a customer only if the following conditions are met:

a) the parties have approved the contract and agree to honour their obligations,

b) the company can identify the rights of each party with respect to the transferred goods and

c) the company can identify the terms of payment regarding the transferred goods and services, d)

the contract has a commercial substance (i.e. it changes the risk, the time of occurrence and

the amount of the entity’s future cash flows),

e) it is likely that the company will collect the consideration to which it is entitled in exchange for

the goods and services transferred to the customer. This involves assessing the customer’s ability and

intention to pay the consideration when it is due.

2. Identification of obligations arising from the contract

A contract includes obligations to transfer goods or services to a customer. An obligation to

transfer a good or service is separable if it meets all of the following conditions:

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

a) the customer may benefit from the transferred good or service separately or in combination

with other resources at his disposal

b) the entity’s promise to transfer the good or service to the customer is identifiable separately

from other promises provided in the contract.

The company did not identify any types of contracts with separable obligations. In the case of

guarantees granted for good performance, they do not represent an additional service, as such they do

not represent a separate obligation.

3. Determination of the transaction price

The company must determine the amount of consideration to which it is expected to be entitled in

exchange for the goods and services promised in the contract in order to recognize the income. The

price may be a fixed amount or may vary due to discounts or similar items.

The price of the sale transactions of the Company is not adjusted for the effect of the time value

of the money, as the Company does not have supply contracts with a settlement term over one year or

containing a significant financing component.

For contracts concluded by the company, the price is negotiated and remains firm. Renegotiated

contractual changes take effect prospectively from the date of renegotiation for subsequent orders,

given that the performance obligation is distinct and is not part of a single performance obligation that

is partially fulfilled at the date of the contract modification.

4. The allocation of the transaction price between the obligations generated by contract

If a contract contains several separate obligations, the company shall allocate the transaction price

to each obligation in proportion to its individual price. The best record for the price of each individual

obligation is the price at which the good or service is sold separately by the entity.

5. Recognition of income at a given time or as the company satisfies the obligation

An obligation arising from the contract is satisfied when control of the goods or services is

transferred to the customer. Control is the ability to decide on the use and obtain the majority of the

remaining benefits of the transferred good or service.

The standard sets the manner in which income is determined, in the sense that it must be recognized

at a given time or over a period of time, which applies to both the sale of goods and the provision of

Paragraph 35 of IFRS 15 specifies that an obligation is satisfied and income is recognized over a

period of time if at least one of the following conditions is met:

-the customer receives and consumes the benefits of the performance performed by the entity

as the entity performs,

-performance by the entity creates or improves an asset (e.g. production in progress) that the

customer controls as the asset is created or improved,

- performance by the entity does not create an asset with an alternative use for the entity and the

entity has an enforceable right to payment for the performance completed up to that date.

According to paragraph 38 of IFRS 15, if an obligation to perform is not met over time in

accordance with paragraphs 35-37 to 6 of IFRS 15, an entity meets the obligation to perform at a

Paragraph (4) of IFRS 15 allows for the aggregation of contracts, i.e. the presentation of a portfolio of

contracts with similar characteristics, if the company reasonably expects the effects on

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

the financial statements for that portfolio, not to differ significantly from those determined by the

application of the standard for individual contracts within that framework

The moment of recognition of revenue results from a cross-check of the specific contractual

provisions with the provisions of IFRS 15.

Income from rent

Rental income related to real estate investments is recognized in the linear profit or loss account

during the lease term, in accordance with IFRS16 provisions.

Financial income includes interest income, foreign exchange income, dividend income and other

financial income.

Interest income is recognized in the profit or loss account on accrual basis, using the effective

interest method. The interest income generated by a financial asset is recognized when the company is

likely to obtain economic benefits and when that income can be accurately measured.

Dividend income generated by investments is recognized when the shareholder’s right to

receive payment has been established. The company records dividend income at the gross amount

including dividend tax (where applicable), which is recognized as current expense.

•Accounting policies for provisions

Provisions are recognized when the company has a present obligation (legal or implied) as a result

of a past event, the company is likely to be required to settle the obligation and a reliable estimate of the

value of the obligation can be made.

The amount recognized as a provision is the best estimate of the consideration required to settle

the current obligation at the end of the reporting period, taking into account the risks and

uncertainties surrounding the obligation.

The accounting of provisions is kept differently, according to the nature, purpose or object for

which they were set up.

Provisions for collaterals

The Company constitutes provisions for collaterals when the products or services covered by the

collateral are sold.

The value of the provision for the collaterals granted is based on historical, contractual

information or reasonable estimates for the products/services made/rendered for the first time in the

Provisions for risks and expenses

When identifying risks and expenses likely to be incurred by events that have occurred or are

occurring and whose object is determined accurately but whose materialization is uncertain, the

company covers these risks by setting up provisions.

Provisions for risks and expenses are set up for items such as:

- risks specific to the aviation industry, litigations, fines, penalties, compensations, damages and

other uncertain debts.

Provisions for decommissioning of property, plant and equipment

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

Upon initial recognition of a property, plant and equipment, the value of the costs of

disassembly, removal of the element and restoration of the site where it is located is estimated as a

consequence of the use of the element over a certain period of time.

These costs are reflected by setting up a provision that is recorded in the profit and loss account

throughout the life of property, plant and equipment, by being included in the depreciation expense.

The revision of the estimates for the decommissioning and restoration provision is determined by

the annual review of dismantling costs. The Commission of specialists from the company appointed

by decision examines periodically whether the initial estimates of the dismantling costs are

Provisions for employee benefits

They are recognized for the employee benefits granted in accordance with the applicable

Collective Labour Agreement only if:

- the entity has a legal and implicit obligation to make such payments as a result of past events;

- a reliable estimate of the obligation can be made.

The provisions are reanalysed at the end of each reporting period so as to reflect the current best

•Accounting policies for grants and other non-reimbursable funds

The subsidies reflect distinctly: -

government subsidies;

- non-reimbursable loans with the character of grants; -

other amounts received in the form of grants.

Grants are recognized at their approved value. Grants received as non-monetary assets are

recognized at fair value.

Government grants are initially recognized as deferred income at fair value when there is

reasonable assurance that it will be collected and the company will comply with the conditions

associated with the grant.

Grants that compensate the company for the expenditure incurred are recognized in the profit or

loss account on a systematic basis, in the same periods in which the expenses are recognized. Grants

compensating the company for the cost of an asset are recognized in the profit and loss account

systematically over the lifetime of the asset.

Revenue subsidies are recorded on a systematic basis as revenue from the periods corresponding

to the related expenditure that such subsidies are to offset.

In the event that subsidies are collected during a specific period for expenditure not yet incurred,

the subsidies received do not represent revenue for that current period. They are recognized in the

accounts as advance income and are returned to the profit and loss account as the expenses they offset

•Accounting policies for the production of goods and services

The management accounting organization in Aerostar is based on the applicable legal provisions

and the manual of procedures and work instructions specific to the management accounting,

adapted to the specific activity of the company.

The purpose of management accounting is to:

- collect direct, indirect and ancillary costs according to their nature;

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

- distribute indirect costs;

- settle direct and indirect costs.

The main purpose of management accounting is to determine the result per production orders or

services and per organizational structure.

According to accounting regulations, the cost of goods, works, services performed does not

include the following items that are recognized as expenses of the period in which they occurred:

(a) losses in materials, labour or other production costs related to scrap and underactivity costs;

(b) general administrative expenses.

The calculation method used in Aerostar SA is the order-based method.

This method is suitable for individual and series production. The object of recording and

calculating costs by this method is the order launched for a certain quantity (lot) of products

Production costs are collected directly on each order (direct costs) or by distribution (indirect

The actual cost per unit of product is calculated upon completing the order by dividing the

production costs collected per related order by the quantity of products produced under that order.

Orders are launched at the planned price, as appropriate.

In case of orders related to export sales, the price is expressed in lei by converting the currency to

the budgeted exchange rate.

In applying accounting policies, the company issues procedures, instructions and working

provisions approved by the executive management.

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

NOTE 4 - TRANSACTIONS IN FOREIGN CURRENCY

AEROSTAR considers the Romanian leu as a functional currency, and the financial statements are

presented in thousands of LEI.

Transactions in foreign currency are recorded at the exchange rate of the functional currency on the

date of the transaction.

On the date of the financial position statement, the financial assets and liabilities denominated in

foreign currency are evaluated in the functional currency using the exchange rate of the foreign

exchange market, communicated by the National Bank of Romania, valid at the end of the financial

1 USD (US dollar)

1 GBP (Pound sterling)

The favourable and unfavourable exchange rate differences resulting from the settlement of

financial assets and liabilities denominated in foreign currency are recognized in the Profit or Loss

Statement for the financial year when they occur.

Considering that 69% of the turnover recorded in the reporting period is denominated in USD and EUR,

while a significant part of the operating expenses is denominated in LEI, changes in foreign exchange

rates will affect both its net income and its financial position as expressed in the functional

In the reporting period, the net foreign currency exposure resulting from the difference between the

amounts collected from the financial assets and the payment of the financial liabilities denominated in

foreign currency was as follows:

Net foreign exchange exposure

Proceeds from financial assets

Payments of financial liabilities

During the reporting period, the quarterly variation of the average foreign exchange rate

+ 0,82% in the 1st quarter compared to 31.12.2021 +

4,23% in the 2nd quarter compared to 31.03.2022 +

2,89% in the 3rd quarter compared to 30.06.2022 -

4,32% in the 4th quarter compared to 30.09.2022

and determined a +7,30% variation of the average USD/LEU rate in 2022 compared to the

beginning of the year.

- 0,04% in the 1st quarter compared to 31.12.2021 -

0,03% in the 2nd quarter compared to 31.03.2022 -

0,63% in the 3rd quarter compared to 30.06.2022

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

- 0,57% in 4th quarter compared to 30.09.2022

and determined a -0.30% variation of the average EUR/LEU rate in 2022 compared to the

beginning of the year.

Thus, the devaluation of the LEU currency against the main foreign currencies determined the

recording of a financial profit from favourable exchange rate differences of 2.153 thousand LEI.

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

NOTE 5 - INTANGIBLE ASSETS: Reporting period 31 December 2022

Other intangible assets

Values as on 31 December 2022Values as on 01 January 2022

Net value on 31

Other intangible assets

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

Other intangible assets

COMPARATIVE FIGURES - INTANGIBLE ASSETS

Reporting period 31 December 2021

Values as on 31 December 2021Values as on 01 January 2021

Net value on 31

Other intangible assets

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

The category of intangible assets includes the following classes of assets of a similar nature and use: •

• Other intangible assets

The software programs are recorded under other intangible assets.

The estimated useful lifetimes of the intangible assets are determined in years, based on the contractual period or the duration of use, as the case may be.

The useful lifetime of the IT software purchased or generated internally is 3 years.

The expenses with the depreciation are recognized in the profit and loss account by using the linear calculation method.

The intangible assets in balance as on 31.12.2022 are not impaired and no adjustments were made for the impairment thereof.

In determining the gross carrying amount of the intangible assets, the company uses the historical cost method.

The value of the fully amortized software licenses as on December 31, 2022 and which are still in use is 3,447 thousand lei.

All outstanding intangible assets as on 31 December 2022 are the property of AEROSTAR.

The intangible asset inflows were achieved through:

817 thousand lei

• development of the IT production management system-version 3

• acquisition of software licenses

79 thousand lei

738 thousand lei

During the reporting period, there were no entries of licenses generated internally or acquired through business combinations.

During the reporting period, there were no assets classified as held for sale in accordance with IFRS 5.

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT : Reporting period 31 December 2022

Other equipment,

office equipment

Investment property

Property, plant and

equipment in progress

Values as on 31 December 2022Values as on 01 January 2022

equipment and means

Net value on 31

Other equipment, office

Investment property

Property, plant and

equipment in progress

equipment and means

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

COMPARATIVE FIGURES : PROPERTY, PLANT AND EQUIPMENT reporting period 31 December 2021

Other equipment,

office equipment

Investment property

Property, plant and

equipment in progress

Values as on 31 December 2021Values as on 01 January 2021

equipment and means

Net value as on

Net value as on

31 December 2021

Other equipment,

office equipment

Investment property

Property, plant and

equipment in progress

equipment and means

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

Property, plant and equipment shall be measured at acquisition or production costs less accumulated

depreciation and impairment losses.

The depreciation method used for property, plant and equipment is the linear depreciation method.

Depreciation expenses are recognized in the profit and loss account.

The following useful lives assumed for property, plant and equipment:

- construction30-50 years

- technological equipment2-25 years -

means of transport4-18 years -

other property, plant and equipment2-18 years -

real estate investments25-50 years

The useful life spans are established by committees made up of specialists from our company. The

depreciation tax times of property, plant and equipment are regulated by the relevant tax legislation.

The company did not acquire assets from business combinations and did not classify assets for sale.

The real estate investments comprise 11 real estate properties – buildings that are leased to third

parties based on lease contracts.

The value of rental income for this category of assets was 4,930 thousand lei.

On the date of transition to IFRS, the company estimated and included in the cost of property, plant

and equipment the estimated costs for decommissioning them at the end of the useful life.

These costs were reflected in the set-up of a provision, which is recorded in the profit and loss account

throughout the lifetime of the property, plant and equipment, by inclusion in the depreciation

The depreciation of an asset begins when the asset is available for use and ends on the date when the

asset is reclassified in another category or on the date on which the asset is derecognized.

The depreciation does not cease when the asset is not in use.

The lands and buildings are separable assets and they are accounted for separately, even when

acquired together.

The land has an unlimited useful life and therefore it is not subject to amortization.

In accordance with the provisions of IAS 36 “impairment of assets”, the company has proceeded to

identify any signs of impairment of the property, plant and equipment, taking into account both internal

and external sources of information.

Internal sources of information:

The economic performance of the assets is good, all assets that are in operation benefit the

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

External source of information:

The indicator that provides information on the investors’ interest in the companies listed on the

capital market is the stock market capitalization relative to equity (MBR).

MBR indicator -Market to book ratio

stock market capitalization/equity

The over-unit value of the MBR indicator is obtained by companies that are well listed on the capital

market and that are of interest to the investors.

The property, plant and equipment in balance on 31.12.2022 are not impaired and no significant

impairment indices were found.

The gross carrying amount of the fully depreciated property, plant and equipment that was still in use

on December 31, 2022 is 61,562 thousand lei.

As on 31.12.2022 there are no mortgages set up on the real estate assets owned by Aerostar S.A.

Inflows of property, plant and equipment were achieved through:

commissioning of technological equipment, hardware equipment,

measurement and control equipment

land acquisition

Property, plant and equipment in progress in 202225.787 k lei

Outflows of property, plant and equipment were achieved through:

transfer of assets in progress to property, plant and equipment

as a result of commissioning

derecognition of tangible assets as a result of the company no longer

expecting future economic benefits from their use

derecognition of a property, plant and equipment following the transfer free

of charge to the patrimony of the Bacau County Council, at the location of

the “George Enescu” International Airport, of the equipment used by the

company in the operation of military aircraft.

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

NOTE 7 - FINANCIAL ASSETS

current titles -

contribution to

On 1 January 2022

Increases/(Reductions)

On 31 December 2022

A) Investments in affiliated entities registered at cost:

Name of subsidiary/

Registered office

Financial information

related to 2021

Reservesvalue/ asset/

(k lei) shareshare

(k lei) (k lei)

Airpro Consult SRL Bacău

9, Condorilor’s Street

Foar SRL Bacău

9, Condorilor’s Street

81.000820,012,7

Aerostar’s shareholdings in affiliated companies are recorded at cost.

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

As of 31.12.2022, the company did not change to increase/decrease the share of participations, maintaining the same influence, as in 2021,

on the companies included in the equity portfolio.

Both companies in which Aerostar holds shares are registered in Romania.

B) Investments in equity instruments through other comprehensive income:

Name of the issuer

31.12.2022 (k lei)

Portfolio value at

market price (k lei)

94C Pictor Aman, Bacău

Registered office

Evergent Investments S.A.

main activity according

The company acquired 43.047.138 shares of Evergent Investments S.A, listed on the Bucharest Stock Exchange. Aerostar accounts for holding

shares at fair value through other comprehensive income in accordance with IFRS 9 “Financial instruments”. The company used the irrevocable

option of designating these equity instruments at fair value through other comprehensive income as these financial assets are held for both the

collection of dividends and the gains on their sale, and not for trading. The gain or loss on these capital instruments is recognized in other

comprehensive income, except for dividend income.

C) Money contribution to the establishment of the initial patrimony of the association “C-EDD Education Cluster for

Sustainable Development”

The Association was established voluntarily by the founding members, functioning as a Romanian legal person under private law without

patrimonial purpose.

The Association is non-governmental, apolitical, non-profit and independent, not subordinated to any other legal person.

The purpose of the Association is to develop and implement effective public-private dialog mechanisms in the educational field, to act as a space

for dialog and collaboration between the main actors involved in education, to increase the quality of educational processes and to connect

continuing education with the economic environment in order to provide it with qualified human resources for sustainable development.

The value of the contribution of AEROSTAR company to the patrimony of the association “C-EDD Education Cluster” is in the amount of

AEROSTAR S.A. BACĂU

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2022

(all amounts are expressed in thousand lei, unless otherwise specified

NOTE 8 - TRADE RECEIVABLES

TRADE RECEIVABLES OF WHICH:

Customers, of which:

Domestic customers

Foreign customers

Uncertain customers

Adjustments for impairment of receivables -

Suppliers – debtors

Adjustments for the impairment of receivables -

advances granted to customers

TOTAL TRADE RECEIVABLES

In accordance with the provisions of the Accounting Policy Manual, to cover the risk of non-recovery

of the amounts representing uncertain trade receivables, the company records adjustments for the

impairment of uncertain customers, as follows:

- 50% of the value of receivables not collected on term, if the delay period is between 30 days and 180

days. On December 31, 2022, the company registered adjustments for depreciation of this nature in the

amount of 916 thousand lei;

- 100% of the value of receivables not collected on term, if the delay period exceeds 180 days. On

December 31, 2022, the company registered adjustments for depreciation of this nature in the amount

of 38 thousand lei.

When determining the recoverability of a trade receivable, the changes considered were the ones

occurred in the customer’s creditworthiness from the date when the credit was granted till the reporting

The debtors-suppliers have the following discount limit:

• in 2023: 5.309 thousand lei

• in 2024: 145 thousand lei

The receivables expressed in foreign currency were evaluated at the market exchange rate

communicated by the National Bank of Romania valid for the closure of December 2022.

The favourable or unfavourable exchange rate differences between the exchange market rate at which

the receivables are accounted in foreign currency and the foreign exchange market rate communicated

by the National Bank of Romania valid for the closure of December 2022 were recorded in the

corresponding income or expense accounts.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 9 - OTHER RECEIVABLES

Receivables relating to manpower and similar166

Receivables related to the budget of social

insurance and the state budget, of which:

Non-chargeable VAT

amounts to recover from the National Health

System (allowances for medical leaves)

Amounts in the form of subsidies

Excise duty to be recovered related to the fuel

Other claims in connection with the local budget

representing the fee of public service to recover

resulting from corrected declarations

Other claims in connection with the social

security budget and the state budget

Interest to be received from bank deposits

Diverse debtors

Adjustments for the depreciation of the

receivables – diverse debtors

TOTAL OTHER RECEIVABLES

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

Other materials

Finished products

Products and services in progress

Gross value of inventories (unadjusted)

ADJUSTMENTS FOR DEPRECIATION OF INVENTORIES

Total adjustments

Adjustments for impairment

of raw materials

Adjustments for impairment

of consumables Adjustments

for impairment of semi-

finished parts Adjustments

for impairment of finished

products Adjustments for

impairment of production in

* The raw material participates directly to the product manufacturing and is found in the semi-finished or

finished product, either in their initial state, or shaped (bars, pipes, plates, profiles, wires etc);

** The consumables participate or contribute to the manufacturing or operating process, without being usually

found in the finished product (auxiliary materials, fuels, spare parts, tools, jigs and fixtures and other

The inventories are assessed at the lowest value between the cost and the net achievable value.

The net achievable value is the estimated sale price for inventories minus all estimated costs for

completion and the estimated costs required for the sale.

The cost of inventories includes: acquisition costs, conversion costs as well as other costs incurred to

bring inventories in the state and location where they are currently found.

Value adjustments are made regularly based on the findings of the inventory commissions and/ or the

module managers in order to present them at the lowest value between the cost and the net achievable

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

Within the company the goods deemed to be depreciated are those older than the storage period

established by internal decision of the Board of Directors.

In accordance with the Accounting Policy Manual, at Aerostar SA, adjustments are set up for the

inventory depreciation, as follows:

-For raw material, consumables, semi-finished parts and spare parts, distinct periods are

established for each profit centre;

-For the inventories of finished products, depreciation adjustments are set up for each period, as

a) in a percentage of 100% of the value thereof, for the inventories of this nature that are not

based on contracts with the customers;

b) in variable percentages, as agreed with the profit centres involved, for the inventories of

finished not delivered at the contractual deadlines.

The total value of inventories recognized as an expense during the period is 156.194 thousand lei.

AEROSTAR holds inventories of finished products (buffer stocks) at the levels agreed contractually

with the customers.

AEROSTAR has no pledged inventories.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 11 - CASH AND CASH EQUIVALENTS

The cash includes:

- current cash available at the company’s cashier’s desk;

- sight deposits held by banks (current accounts in banks).

The cash equivalents include: -

term deposits held by banks;

- Cheques and trade effects (promissory notes) deposited with banks for collection.

At the end of the reporting period the cash and cash equivalents consisted in:

Cash at the cash desk

Sight deposits held by banks

Term deposits held by banks

Cheques and trade effects to collect

Cash and cash equivalents

There are no restrictions on the current bank accounts and deposits held by banks.

The value of the bank Credit Line that can be used as overdraft, available for future operations is

2.500 thousand USD (the equivalent of 11.587 THOUSAND LEI).

During the reporting period the bank Credit Line was not used.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTA 12 - COMPANY EQUITY

The company equity on 31 December 2022 is 493.709 thousand lei. The net increase of the equity in

2022 compared to the end of the year 2021 was 72.321 thousand lei.

The main elements of the company equity during the period January – December 2022 vs. 2021:

The share capital remained unchanged

On 31 December 2022, the share capital of AEROSTAR SA is 48.728.784 lei, divided in

152.277.450 shares having each a nominal value of 0,32 lei.

The reserves increased by 47.019 thousand lei:

An increase by 7.961 thousand lei on account of distributing the profit for the year 2022

for reserves from the fiscal facilities;

An increase by 385 thousand lei on account of moving to reserves the result carried

forward, representing a surplus made of revaluation reserves;

An increase by 31.438 thousand lei as a result of distributing the profit for the year 2021

to the destinations decided by the shareholders at the OGMS dated 20 April 2022;

An increase by 7.235 thousand lei on account of re-evaluating at fair value the equity

instruments through other elements of the global result.

Other capital elements decreased by the amount of 2.520 thousand lei on account of the

deferred income tax recognized in company equity.

The result carried forward decreased by 210 thousand lei as follows:

An increase by 175 thousand lei on account of the deferred income tax recognized on

account of equity;

A decrease of 385 thousand lei via transfer to reserves of the result carried forward,

representing a surplus obtained from revaluation reserves;

The profit for the year 2021, taken over the result carried forward was distributed integrally

to the destinations decided by the shareholders, following the decision of the OGMS dated

The balance of the result account carried forward on 31 December 2022 is 50.938 thousand lei,

- the result carried forward incurred by the use, on the date of transition to IFRS, of the fair

value as presumed cost = 26.775 thousand lei;

- the result carried forward representing the gain obtained from re-evaluation reserves, capitalized

as the property, plant and equipment and intangible assets were amortized = 24.163 thousand lei;

The result of the period was a profit in the amount of 90.273 thousand lei.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 13 - PROVISIONS

Increases/ Reductions/

Set-ups/ Reruns/

Reclassification Reclassification

of provisions of provisions

Total provisions 131.829 26.583 29.830

Provisions for bonds granted

45.807 18.803 17.986

decommissioning property,16.415209

plant and equipment

Provisions for the employees’

5.7567.7605.732

Other provisions

12.0711.22025.888

Long-term provisions

Provisions for bonds

granted to customers

decommissioning property,

plant and equipment

Other provisions

Short-term provisions

Provisions for bonds

granted to customers

Provisions for employees’

Other provisions

Provisions set up for guarantees granted to customers

Provisions for bonds granted to customers are set up to cover the non-conformance risks of the

products sold and the services performed, in accordance with the contractual provisions.

Provisions for decommissioning of Property, Plant and Equipment

Provisions for decommissioning of property, especially buildings are set up to cover the

decommissioning costs, of removal of the elements and restoration of the locations where they are

placed and included in their cost. The value was estimated using an update annual rate of 6,5%.

Provisions for beneﬁts granted to employees

The provisions for benefits granted to employees are set up for the bonus granted according to the

clauses of the applicable Collective Labour Agreement (bonus for the end of the financial year, for

performance) and for the annual holidays leave not taken by the employees in the previous year.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2020

(unless specified otherwise, all amounts are stated in thousand lei)

Other provisions

In the category Other provisions are found the provisions set up for:

coveringrisks specific to the aviation industry, such as: risk of hidden deffects, risk of discovering

quality incidents that can incur damages.

coverage of some expenses regarding the Company’s obligations towards A.J.O.F.M., based on

O.U.G. 95/2002;

covering some risks regarding the application of penalties for delays and damages associated with

the manufacture of aeronautical products.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTA 14 - SUBSIDIES

Subsidies related to assets

AEROSTAR recognizes as deferred income the subsidies related to assets.

Balance on 1 January, of which:

Long term Subsidies

Subsidies registered under income

corresponding to the calculated amortization

Balance on 31 December, of which:

In 2022 AEROSTAR S.A. did not receive subsidies for financing its assets.

The subsidies received in the previous years for financing its assts were related to the implementation

of 3 investment projects under 3 non-reimbursable financing agreements:

1.Contract no. 210304/22.04.2010: ‘Extension of the manufacturing and assembly capacities for

aerostructures for civil aviation’, performed between April 2010 and October 2012, the value of

the subsidy received from the Ministry of Economy, Trade and Business Environment

(MECMA) being 5.468 thousand lei;

2.Contract no. 229226/14.06.2012: ’Setting up a new manufacturing capacity for diversifying

production and export growth’, carried through between June 2012 and May 2014, the value

of the subsidy received from the Ministry of Economy, Trade and Business Environment

(MECMA) being 6.011 thousand lei;

3.Contract no. 5IM/013/24.03.2015: ’Consolidation and sustainable development of the

machining and painting sectors by high performance investments’, carried through between

March and December 2015, the value of the subsidy received from the Ministry of European

Funds (MFE) being 8.299 thousand lei;

All investment projects in immobilized assets were implemented and finalized in accordance with the

contractual provisions assumed.

The balance registered on 31 December 2022 stands for subsidies related to investments in

immobilized assets which are to be recorded as income as the calculated amortization is registered

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS FOR

THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 15 - COMMERCIAL DEBTS

Prepaid amounts collected

on customers’ account, of which:

Customers-creditors from Romania

Customers-creditors from outside Romania

Suppliers, of which:

Providers of materials and services from Romania

Providers of materials and services from outside

Suppliers-invoices not arrived

Suppliers of non-current assets

Total commercial debts

The payments in advance collected from foreign customers are for aircraft maintenance and repair

work (99,7%) and other services provided (0,3%).

For the registered debts no mortgages were set up.

The favourable or unfavourable exchange rate differences between the market exchange rate at which

the debts in foreign currencies are registered and the market exchange rate communicated by the

National Bank of Romania for the closure of December 2022, were registered in the corresponding

accounts of revenues or expenses.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 16 - OTHER LIABILITIES

Other current liabilities, of which:

Liabilities related to manpower and similar accounts

Liabilities related to social security budget and state

budget, of which:

- Social insurance

- Labour safety contribution -

Tax on salary type revenues

- Contribution for people with unemployed

- Other social liabilities

Other liabilities, of which:

- diverse creditors

- bonds received

Other long-term liabilities1.5031.525

In the category Other long-term liabilities is found the liabilityregarding the right to use the land

leased for the Maintenance Hangar of Iasi.

The dividends in balance on 31 December 2022, in the amount of 2.502 thousand lei represent the

amounts remained in balance for the shareholders who did not show up at the offices of the paying

agent CEC Bank S.A. (the paying agent designated byAEROSTAR) and which were not time-

The company did not register overdue liabilities to the state budget, the social insurance budget and

the local budgets.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 17 - DEFERRED PROFIT TAX

The deferred tax is determined for the temporary differences which occur between the tax base of the

assets and liabilities and their accounting base. The deferred tax is calculated at a tax rate of 16%

applicable to the temporary differences.

The Company estimated and registered liabilities regarding the deferred tax related to non-current

assets (which results from differences between accounting and fiscal values, the different useful life,

s.o.) and of the reserves and recognized receivables regarding the deferred tax related to securities

(shares), stocks and receivables that were adjusted for depreciation, provisions for customer bonds, and

other provisions.

The structure of deferred income tax registered on 31.12.2022 is:

Liabilities from deferred tax

1. Liabilities related to the deferred tax generated by the differences between the

accounting bases (higher) and the fiscal ones (lower) of the non-current assets

2. Liabilities related to the deferred tax concerning legal reserves

3. Liabilities on deferred tax related to reserves from the fiscal facility

4. Liabilities on deferred tax related to the reported result representing a surplus from

revaluation reserves

5. Liabilities on deferred tax related to immobilized securities-shares

Total liabilities on long-term deferred tax

Receivables on deferred tax

1. Receivables on deferred tax related to other provisions

2. Receivables on deferred tax related to provisions for bonds granted to customers

3. Receivables on deferred tax related to provisions for manpower benefits

4. Receivables on deferred tax related to short-term adjustments for depreciation of the

5. Receivables on deferred tax related to short-term adjustments for depreciation of

trade receivables

Total receivables on deferred tax

The Company did not recognize receivables on deferred tax related to other provisions for the risks

specific to the aviation industrydue to an uncertaintyregardingthe fiscal deductibilityof the expenses

that could derive from the settlement of the obligations arising in the future periods. Therefore, the

differences between the tax base and the accounting base would be null.

In the period 01 January 2022 – 31 December 2022, the company registered income from the tax on

deferred profit in the amount of 6.985 thousand lei and expenses with the tax on deferred profit in the

amount of 4.636 thousand lei.

The tax on deferred profit recognised on the account of equity in the amount of 19.654 thousand lei

consists of liabilities on deferred tax in the amount of 20.258 thousand lei and receivables on deferred

tax in the amount of 604 thousand lei.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 18 - FINANCIAL INSTRUMENTS

A financial instrument is any contract generating simultaneously a financial asset for an entity and a

financial liability or an equity instrument for another entity.

The financial assets and liabilities are recognized when AEROSTAR SA becomes part of the

contractual provisions of the instrument.

On the reporting date AEROSTAR S.A. does not hold:

financial instruments kept for making transactions (including derived instruments);

financial instruments kept till due date;

financial instruments available for sale.

The financial assets of AEROSTAR S.A. include:

sight deposits and term deposits with banks;

trade receivables;

immobilized receivables (bonds for third parties);

The financial liabilities of AEROSTAR S.A. include:

trade liabilities;

On the reporting date AEROSTAR does not have financial liabilities on overdrafts and long-term

The main types of risks generated by the financial instruments held, to which AEROSTAR S.A is

b) liquidity risk,

c) currency risk,

d) interest rate risk.

Thecredit risk is the risk that one of the parties involved in a financial instrument generates a financial

loss for the other party as a result of the failure to meet a contractual obligation, related mainly to:

- sight deposits and term deposits with banks -

trade receivables;

The sight & term deposits are placed only at first-rank bank institutions with ratings that reflect the

lowest degree of risk.

In some cases, specific instruments of commercial credit risk decrease (receipts in advance, letters of

payment bank security, confirmed export credentials) are requested. AEROSTAR has no significant

exposure toward a single partner and records no significant concentration of receivables on a single

geographical area.

Exposure to credit risk

Theaccountingvalue of the financial assets, net of depreciation adjustments, represents the maximum

exposure to the credit risk.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

The maximum exposure to credit risk on the reporting date is presented in the table below:

Sight and term deposits with banks Trade

receivables, net of adjustments for

Immobilized receivables

The maximum exposure to credit risk by geographical areas for trade receivables net of

depreciation adjustments is presented in the table below:

31.12.202231.12.2021

Domestic market17.379 20.596

Euro zone countries21.810 15.243

Great Britain14.939 12.373

Other European countries 2.176 1.574

Other regions10.637 3.851

Total66.941 53.637

Depreciation adjustments

The timeframe structure for the gross trade receivables on the reporting date is presented in the table

Gross valuefor depreciation

Gross valuefor depreciation

In due time65.400

Past due, total of which:2.495954

31-60 days 1.568 632

61-90 days 567 127

91-120 days 63 32

Over 120 days 286 152

Over 1 year 11 11

Themovement in theadjustments forthedepreciation of tradereceivables duringthe year is presented in

the following table:

31.12.202231.12.2021

Balance on 1 January Adjustments

set up for depreciation

Adjustments for depreciations resumed as

Balance on 31 December

On 31.12.2022, 97% of the balance of trade receivables is related to customers with a good payment

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

b) Liquidity risk

The liquidity risk is the risk that AEROSTAR encounters difficulties in meeting the obligations

associated to the financial liabilities which are settled by cash payments.

AEROSTAR’s policy regarding this risk is to maintain an optimum level of liquidity so as to be able

to pay for the liabilities, as they become due.

To evaluate the liquidity risk, the treasury cash flows from operations, from investments and from

financing operations are monitored and reviewed weekly, monthly, quarterly and yearly in order to

determine the estimated level of net liquidity modifications.

Also, the specific liquidity indicators are reviewed monthly (general liquidity, immediate liquidity

and rate of general solvency) against the budgeted levels.

Moreover, in order to reduce the liquidity risk, AEROSTAR maintains annually a liquidity reserve as

a Credit Line (usable as an overdraft) granted by banks to a maximum limit of 2.500 thousand USD.

The time intervals used to review the contractual due dates of the financial liabilities, with a view to

recording the timeframe for the cash flows are shown in the table below:

Trade liabilities

Trade liabilities

The cash flows included in the analyses of the due dates are not expected to take place earlier or with

significantly different values.

On 31.12.2022 AEROSTAR has no records of overdue financial liabilities.

c) Foreign currency risk

The foreign currency risk is the risk that the fair value or future cash flows of a financial instrument

fluctuate because of the changes in the currency exchange rates.

Exposure to the foreign currency risk

AEROSTAR is exposed to the foreign currencyrisks, as 69% of the turnover recorded in the reporting

period is denominated in USD and EUR, while a significant part of the operating expenses is

denominated in LEI.

Therefore, Aerostar is exposed to the risk that the currency exchange rate variations will affect both

its net income and its financial position as expressed in lei.

The net exposure of the financial assets and liabilities to the foreign exchange risk is presented below

based on the carrying accounting values denominated in foreign currency recorded at the end of the

reporting period.

31.12.2022Thousand EURThousand USDThousand GBP

Cash and cash equivalents

Trade receivables

Trade liabilities

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

Net exposure in original currency2.0617.866(17)

Sensitivity analysis

Taking into consideration the net exposure calculated in the above table, AEROSTAR can be deemed

to be exposed mainly to the foreign exchange risk generated by the variation of the foreign exchange

rates USD/LEU and EUR/LEU.

Taking into consideration the evolution of USD/LEU and EUR/LEU exchange rate in the previous

years, a relatively high volatility (+/- 10%) of the USD/LEU exchange rate and a moderate volatility

(+/-2%) of the EUR/LEU exchange rate can be noticed.

Thus, a reasonably possible variation of +/- 10% of the USD/LEU foreign exchange rate and +/-2%

of the EUR/LEU exchange rate and may be factored in at the end of the reporting period.

The effect of the reasonably possible variation of the exchange rates EUR/LEU and USD/LEU over

the financial result of AEROSTAR is calculated in the following table:

Net exposure, in the currency of origin

Currency exchange rate

Net exposure in functional currency

Possible reasonable variation of exchange

Effect of variation on the financial

+/- 204 MII LEI

+/- 3.646 MII LEI

d) Interest rate risk

For the reporting period AEROSTAR has available a multi-product Credit Facility of 7.000 thousand

USD, intended for financing the Company’s operations, which includes:

1) Product A: in the amount of 2.500 thousand USD, usable as an overdraft, set up to provide at

any given time the necessary financial liquidity and flexibility (liquidity reserve);

2) Product B: in the amount of 7.000 thousand USD (provided that the aggregate amount used from

Product A and product B does not exceed the value of the multi-product Credit Facility), usable

as a facility of issuing bonds as instruments to ensure collaterals for the commercial contractual

obligations by issuing bank bond letters and import Letters of Credit.

The bank interest is applicable only for the overdraft for Product A in the amount of 2.500 thousand

As during the reporting period AEROSTAR did not use the Product A, the company revenues and

cash flows are independent from the interest rate variations on the banking market.

On 31.12.2022, the level of bonds granted by AEROSTAR under commercial agreements, by issuing

bank bond letters and import Letters of Credit amounts to 6.237 thousand USD (the equivalent of 1.346

On 31.12.2022 no mortgages are set up on the property assets in AEROSTAR’s ownership.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 19 - OPERATING INCOME

Revenues from sales, of which:

Revenues from product sales

Revenues from services provided

Revenues from selling goods

Revenues from rents

Trade discounts granted

Revenues from other activities

Revenues related to inventories of finished

products and production underway Revenues

from the production of fixed assets Revenues

from operating subsidies Revenues from

subsidies for investments Other revenues

from operations

Total operating income

In 2022 the company recorded incomes from operating subsidies in the amount of 169 thousand lei for

hiring for an indefinite period of time graduates from various educational institutions in

accordance with Law no. 76/2002 regarding the unemployment insurance system and the stimulation of

Other revenues from operation in the amount of 1.674 thousand lei are represented, among others, by

revenues from time-barred dividends, revenues from recoveringdebts from former employees (tuition

expenses and other debts), revenues from indemnities and recovered taxes.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 20 - OPERATING EXPENSES

Expenses with employee benefits, of which:

Salaries and allowances

Expenses with ticket meals and holiday vouchers

granted to employees

Expenses with social security

Expenses with raw material and other materials

Energy, water and gas

Other material expenses, of which:

Expenses with non-inventory materials

Expenses with goods

Expenses with packaging

Expenses with other materials

Expenses with external services, of which:

Transport costs

Commissions and fees

Travels, deployments

Renting expenses

Other expenses with services provided by third parties

Trade discounts received

Net expenses (revenues) from adjustments on

Net expenses (revenues) from adjustments on

Other operational expenses

Total operating expenses

In accordance with the provisions of the International Financial Reporting Standards and of the

Accounting Policies Manual, the company registers adjustments on provisions (Note 13) and

adjustments for the impairment of the current assets, inventories, production in progress and

receivables (Note 8, Note 9 and Note 10).

In 2022, AEROSTAR granted meal tickets to its employees, in the amount of 6.994 thousand lei and

holiday vouchers in the amount of 614 thousand lei.

In the category of other operating expenses in the amount of 6.934 thousand lei are included among

others: expenses with local taxes and fees, sponsorship, donations.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

In 2022 AEROSTAR registered increased/set up and decreased/resumed adjustments, as follows:

Adjustments on provisions

Increases / setups

Decreases / reruns

Net expenses (revenues) from adjustments on

In 2022 the impact of the adjustments on provisions is a decrease of the operating expenses by the

amount of 2.054 thousand lei.

Adjustments regarding impairment of current assets

Increased/set up adjustments

Adjustments for the impairment of investments

Adjustments for impairment of receivables

Losses from receivables and various debtors

Total increased/set up adjustments

Decreased/resumed adjustments

Adjustments for the impairment of inventories

Adjustments for the impairment of receivables

Total decreased/resumed adjustments

Net expenses (revenues) from adjustments on the

impairment of current assets

In 2022 the impact of the adjustments on the impairment of current assets is an increase of the

operating expenses by the amount of 11.678 thousand lei.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 21 - FINANCIAL INCOME

Aspects regarding the Company’s exposure to the risks generated by the financial instruments held are

presented in Note 18 Financial Instruments.

The income related from financial assets evaluated at fair value represents the dividends related to

holding instruments in the equity of Evergent Investments S.A.

Income from foreign currency exchange differences

Income from interest

Income from shares held at subsidiaries

Income related from financial assets evaluated at fair value

Total financial income

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 22 – FINANCIAL EXPENSES

Expenses from exchange rate differences

Expenses with interest related to leasing contracts

Other financial expenses

Total financial expenses

In 2022 the company registered in the financial expenses category: -

expenses from unfavourable exchange rate differences;

- expenses with interests related to the right to use the land leased for the Maintenance Hangar of Iași;

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 23 - TAX ON PROFIT

The tax on pro fit is recognized in the statement of profit or loss.

The tax on profit is the tax payable related to the profit made in the current period, as determined in

accordance with the fiscal regulations applicable on the reporting date.

The profit tax rate applicable for 31.12.2022 was 16% (the same rate was applied for the financial year

31 December 2022

31 December 2021

Gross accounting profit

Expenses with current tax on profit

Reconciliation of accounting profit with the fiscal profit for 31 December 2022Differences

Accounting revenues* 496.123 Fiscal income 453.778 -42.345

Accounting expenses* 396.384 Fiscal expenses 342.013 -54.371

Gross accounting profit, restated* 99.739 Fiscal profit 111.765 +12.026

Accounting tax (16%) 15.958 Fiscal tax (16%) 17.882 +1.924

Tax reductions, of which: 6.161 +6.161

related to investments made

acc.to Art. 22 Fiscal Code

a 12% bonus as per OUG

Tax on final profit15.958 Tax on final profit11.721-4.237

Applicable legal rate 16,00% Legal rate applicable 16,00%

Actual average tax rate,

calculated on gross accounting11.75 %

profit, restated

* The revenues and expenses are obtained after deducting from the total revenues and total expenses,

respectively, the revenues and expenses related to the activities subject to the specific tax.

Comparative figures

31 December 2021

Gross accounting profit

Expenses with current tax on profit

Reconciliation of accounting profit with the fiscal profitDifferences

Accounting revenues*

Accounting expenses*

Gross accounting profit, restated*

Accounting tax (16%)

Fiscal expenses

Fiscal tax (16%)

Tax reductions, of which:

related to investments made

acc.to Art. 22 Fiscal Code

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

a 7% bonus as per OUG

11.232 Tax on final profit

16,00% Legal rate applicable

Tax on final profit

Applicable legal rate

Actual average tax rate,

calculated on gross accounting

profit, restated

The main factors that affected the actual tax rate:

-non-deductible expenses in fiscal terms (expenses concerning the set-up or increase of certain

provisions and value adjustments on the current assets, which are non-deductible fiscally, expenses with

fiscally non-deductible accounting amortization a.o.).

-fiscal facilities representing the tax exemption on profit corresponding to the investments made in

accordance with Art. 22 of the Fiscal Code and sponsorships and a 12% bonus as per OUG 153/2020

regarding the implementation of fiscal measures for maintaining/increasing the company equity;

-non-taxable income obtained from the recovery of certain non-deductible expenses.

On 31 December 2022 the company registered a debt related to the tax on current profit in the amount of

269 thousand lei corresponding to the IV-th quarter of 2022.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 24 - RESULT PER SHARE

The profit per basic share was calculated based on the profit attributable to the ordinary shareholders

and on the number of ordinary shares.

The diluted result per share is equal to the result per basic share, as the company did not register any

potential ordinary shares.

Profit attributable to ordinary shareholders

Number of ordinary shares

Profit per share

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 25 - AVERAGE NUMBER OF EMPLOYEES

Average number of employees

Employees hired through temporary labour agent

Total average number of employees

Number of employees

Employees hired through temporary labour agent

Total number of employees

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 26 - TRANSACTIONS WITH AFFILIATED PARTIES

Acquisitions of goods and services

Airpro Consult SRL Bacău

Foar SRL Bacău

Sales of goods and services

Airpro Consult SRL Bacău

Foar SRL Bacău

Airpro Consult SRL Bacău

Foar SRL Bacău

Dividends collected by Aerostar

Airpro Consult SRL Bacău

Foar SRL Bacău

The transactions with the affiliated parties between 01.01.2022 and 31.12.2022 consisted in:

Services provided by Airpro Consult SRL Bacau to AEROSTAR SA Bacau for temporary

Machinery rental services provided by Foar SRL Bacau to AEROSTAR SA Bacau;

Space rental services provided by AEROSTAR SA Bacau to Foar SRL Bacau.

Dismantling services provided by AEROSTAR SA to Foar SRL Bacău for dismantling a milling

machine CNC MAHO from AEROSTAR SA worth 6 thousand Ron ;

Dividends collected by AEROSTAR SA from Airpro Consult SRL Bacău and Foar SRL Bacău.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 27 - INFORMATION REGARDING THE CASH FLOW

The method used in the Cash Flow Statement is the direct method.

The cash flows statement presents the cash flows and cash equivalents classified by operating

activities, investments and financing, thus indicating the manner in which AEROSTAR generates and

uses the cash and cash equivalents.

In the context of the Cash Flows Statement:

the cash flows are the amounts collected and paid in cash and cash equivalents;

the cash includes the cash available in the company’s cash office and the sight deposits held with

banks (available in the current accounts).

the cash equivalents comprise the deposits formed in banks, bills and promissory notes deposited

with banks in order to be collected.

Thetreasurycash flows from the transactions made in foreign currencyareregistered in the functional

currency by applying to this value the exchange rate between the functional currency (LEU) and the

foreign currency as on the date when the treasury cash flow was generated (date of making payments

and collections).

The earnings and losses arising from the exchange rate variation are not treasury cash flows.

Nevertheless, the effect of the exchange rate variation on the cash and cash equivalent held or owned in

foreign currency is reported in the treasury cash flows statement, but separately from the treasury cash

flows arising from operations, investments and financing, so as to reconcile the cash and cash

equivalents at the beginning and end of the reporting period.

The operating activities are AEROSTAR S.A.’s main cash-generating activities.

the amounts collected from the customers were 485.376 thousand LEI,

the amounts collected from the State Budget were 6.478 thousand LEI, representing VAT and

excise tax refunds

the payments to the suppliers and employees amounted to 344.098 thousand LEI, of which

255.241 thousand LEI payments to the suppliers and 88.857 thousand LEI payments to the

the payments of taxes and duties to the State Budget amounted to 84.428 thousand LEI, of which

13.676 thousand LEI profit tax.

The operating activity generated a net cash of 63.426 thousand LEI, i.e. 28.133 thousand LEI less

than the previous year.

The investment activity included:

payments to purchase tangible and intangible assets in the amount of 31.255 thousand LEI.

payments to purchase financial fixed assets in the amount of 51.916 thousand LEI, representing

purchases of Evergent Investment S.A. shares (stock exchange symbol: EVER), traded on the

Bucharest Stock Exchange;

The purchased shares are held for collecting dividends and for earnings from their sale and not for

Taking into account the tender Offer to buy stock (EVER shares) initiated by Evergent Investments S.A

in December 2022, the executive management of Aerostar S.A. analyses the opportunity to participate

in the offer in January 2023.

Collected dividends in the amount of 2.541 thousand LEI from Evergent Investments S.A.;

Collected dividends in the amount of 311 thousand LEI from the affiliated entities;

Collected interests in the amount of 9.600 thousand LEI from the bank deposits set up.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

The value of the treasury cash flows allocated to increase the operating capacity represents 6% of the

aggregate value of the cash used for operational, investment and financing activities.

As part of the financing activity, an amount of 21.991 thousand LEI was paid, representing dividends

due to the shareholders.

The level of cash and cash equivalents registered on 31.12.2022 amounts to 246.173 thousand LEI,

i.e. 28.298 thousand LEI less compared to the beginning of the year.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 28 - LIABILITIES AND OTHER OFF-BALANCE ITEMS

AEROSTAR S.A. registers as off-balance items, the rights, liabilities and goods which are not

recognized in the company assets and liabilities, i.e.:

Gaurantees granted to customers as letters of bank

guarantee and letters of credit

Guarantees received from suppliers – as letters of

bank guarantees and letters of credit

Goods, of which:

inventories of other materials released for use

(tooling, jigs, fixtures, safety equipment, measuring

and control equipment, technical library etc.)

materials received in consignment

finished products received in consignment

materials – customers

tangible and intangible assets –obtained or purchased

as a result of co-financed activity

material values received for processing/repairs

supporting assets related to the leasing contracts –

Fixed assets proposed for disposal

Other off-balance values, of which:

Material guarantees set up for the managers’

responsibility regarding the management of goods

Liabilities for covering certain future obligations to

A.J.O.F.M. based on OUG 95/2002 regarding the

defense industry

debtors removed from accounts, monitored further on

de minimis aid for participation to fairs and

Greenhouse Gas Emission Certificates

On 31 December 2022, AEROSTAR S.A. had a number of 14.245 greenhouse gas emission

The market value on the last transaction day of a GES certificate was 80,90 Euro, according to the

European EnergyExchange website (in December 2021: 79,51 Euro) at a re-evaluation exchange rate

of 4,9474 Lei/Euro.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 29 – DIRECTORS’ REMUNERATION

The Board of Directors of AEROSTAR S.A.:

Surname and first name

TONCEA MIHAIL-NICOLAE

DOROŞ LIVIU-CLAUDIU

of the Board of Directors

of the Board of Directors

of the Board of Directors

of the Board of Directors

of the Board of Directors

In 2022, the company AEROSTAR did not grant advance payments or credits to the members of the

Board of Directors and did not make any commitment on their account as a collateral of any kind.

In the Ordinary General Meeting of 16 December 2022, the shareholders of the company Aerostar

approved the freezing at the level decided by the ordinary general meeting of shareholders dated 09 July

2020 of the directors’ compensation for the financial year 2023, i.e.:

Maintaining a monthly net fixed remuneration of 4.750 lei for each elected BOD member;

maximum level of additional remunerations for the BOD members who also have executive

attributions, of a monthly fixed amount of at most 10 (ten) times (inclusively) the value of the

fixed remuneration of 4.750 lei, applied individually, as the case may be.

Mandating the BOD to negotiate these remunerations, within the approved ceiling.

The amount of the gross compensations granted to the members of the Board of Directors for 2022, by

virtue of their responsibilities, was 1.725 thousand lei.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 30 – RISK MANAGEMENT

AEROSTAR is exposed to multiple risks and uncertainties that can affect its financial performance.

The business lines run by AEROSTAR, the operational results or the financial statements, may be

affected by the materialization of the risks presented below.

AEROSTAR pursues to secure the average and long-term sustainability and to reduce the uncertainty

associated with its strategic and financial objectives.

The risk management processes ensure the identification, analysis, assessment and management of

risks in order to minimize their effects to an agreed level.

However, there may be risks and uncertainties additional to the ones presented below, which are

currently unknown or considered insignificant, but which in the future may affect the business lines run

Operational Risk

It is the risk to incur losses or of failure to make the estimated profits determined by:

-the use of processes, systems and manpower that were either inadequate or failed to function

-external events and actions: deterioration of the global economic conditions, natural

catastrophes or other events that can affect AEROSTAR’s assets.

In light of the global political turbulence, in the future we may face new types of risks, AEROSTAR

analysing very carefully the main conflict areas.

The Operational Risk is also associated to the Legal Risk, defined as the risk of loss, resulting from the

fines, penalties and sanctions AEROSTAR is liable to in case of non-application or misapplication of

dispositions, legal or contractual regulations, as well as the fact that the rights and contractual

obligations of AEROSTAR and/or of the business partner are not properly established.

The effects of the legal risk are monitored and eliminated through a permanent information system

regarding the legislative modifications, as well as by setting up a review, endorsement and approval

system for the terms and conditions included in the commercial agreements.

AEROSTAR has allocated and will continue to allocate investment funds and other operational

expenses in order to prevent and manage the operational risk.

Moreover, by setting up provisions for risks and related expenses, AEROSTAR aims to have its own

funding to cover its risks of exposure.

Furthermore, in order to minimize the operational risk, AEROSTAR renews annually, with 1

insurance-reinsurance companies, a civil liabilityinsurance contract related to the main business lines

(manufacturing of aircraft products and maintenance for commercial aircraft).

The Credit Risk is the risk that AEROSTAR might bear a financial loss as a result of the failure to meet

the contractual obligations by a partner, being determined mainly by cash, cash equivalents (bank

deposits) and trade receivables.

The bank deposits are placed only in 1

tier bank institutions, deemed to have a high solvency rating.

The credit risk, including the country risk for the country where the customer performs its activity, is

managed per business partner. When necessary, specific instruments of credit risk mitigation are

requested (advance payments, letters of bank guarantee, confirmed letters of credit).

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

AEROSTAR has no significant exposure towards a single partner and does not register a significant

concentration of the turnover on a single geographical area.

However, there is significant exposure of the Airbus programs to the global market, a large share of

our company’s products being incorporated on Airbus airplanes.

A presentation of the quantitative information regarding AEROSTAR’s exposure to the credit risk is

detailed in Note 18 (Financial Instruments) to the Financial Statements.

TheLiquidity Risk is theriskthatAEROSTAR might encounterdifficulties in fulfillingits liabilities-

related obligations as they become due.

To manage the liquidity risk, the cash flows are monitored and analysed weekly, monthly, quarterly and

annually in order to establish the estimated level of the net modifications of the cash. Such reviews

provide the basis for the financing decisions and for the capital expenditures.

In order to reduce the liquidityrisk,AEROSTAR keeps an annual cash-reserve in the form of a Credit

Line usable as an overdraft granted by banks in the amount of 2.500 thousand USD. During the

reporting period, AEROSTAR did not use the Credit Line, all the activities of the Company being

financed from own sources.

The Market Risk is the risk that the fair value or future cash flows of a financial instrument will

fluctuate due to the modifications of the market prices.

The market risk comprises the price risk, the exchange rate risk and the risk of the interest’s rate.

AEROSTAR is exposed mainly to the price risk determined by the fluctuations of the price of raw

material and material used in the manufacturing processes, caused by exceptional events such as the

Brexit agreement with an impact on the procurement of material from UK, the established

international sanctions that lead to limited possibility to provide parts and material, increased costs

due to specific duties for the import/export of metallic products to and from USA.

The risk is managed by:

-diversifying the portfolio of suppliers, which offers increased leverage in negotiations in case

the price of raw materials is increased by certain suppliers.

long-term contract agreements, with provisions on fixed prices.

AEROSTAR is exposed to the exchange rate risk because 65% of its turnover is related to USD and

EUR, while a significant part of the operating expenses is denominated in LEI.

Thus, AEROSTAR is exposed to the risk that the exchange rate variations will affect both its net

income, as well as its financial position, as they are expressed in LEI.

An analysis of AEROSTAR’s sensitivity to the foreign exchange rate’s variations as detailed in Note

18 (Financial Instruments) to the Financial Statements.

As far as the interest rate is concerned, due to the fact that AEROSTAR did not use the contracted

Credit Line in the reported period, the income and cash flows are independent from the interest rate

variation on the banking market.

Other aspects concerning risk management are presented in the chapter OPPORTUNITYAND RISK

MANAGEMENT of the Board of Directors’ Report.

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 31 – PREPAID EXPENSES AND INCOME

Expenses registered in advance (in the short term)617579

Income registered in advance (in the short term)1.876196

The expenses made and the income obtained in the current period, but concerning future periods or

financial years are registered distinctly in the accounting department, as prepaid expenses or prepaid

income, as applicable.

In the category expenses registered in advance in records on 31 December 2022 are found amounts to

resume within a year representing, among others, taxes and duties, subscriptions, insurance policies,

fees, participation to trade fairs and conferences, on-line services, maintenance of IT systems.

On 31 December 2022, Aerostar derecognised the long-term income registered in advance. In the

category of short-term income registered in advance are highlighted as values corresponding to

provided services and delivered goods for which the income recognition conditions of IFRS 15

"Revenue from Contracts with Customers" are not met (the control over goods/services hasn’t been

transferred yet).

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 32 - ASSETS REGARDING THE RIGHTS TO USE THE LEASED ASSETS:

Reporting period 31 December 2022

Asset related to the

right to use the land

for the Maintenance

Hangar in Iași

Values on 31 December 2022Values on 01 January 2022

Updated provision for

dismounting/removal

/restoration of

supporting assets

Depreciation in the

31 December 2022

Asset related to the

right to use the land

for the MRO Hangar

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

COMPARATIVE FIGURES - ASSETS REGARDING THE RIGHTS TO USE THE LEASED ASSETS – reporting

period 31 December 2021

Asset related to the

right to use the land

for the Maintenance

Hangar in Iași

Values on 31 December 2021Values on 01 January 2021

Updated provision for

dismounting/removal

/restoration of

supporting assets

Depreciation in the

31 December 2021

Asset related to the

right to use the land

for the MRO Hangar

The right to use the land for the Maintenance Hangar in Iaşi was re-evaluated at the foreign exchange rate communicated by the National Bank of

Romania on the last banking day of each reporting period (31 March 2021, 30 June 2021, 30 September 2021).

AEROSTAR S.A. BACAU

NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2022

(unless specified otherwise, all amounts are stated in thousand lei

NOTE 33 - EVENTS AFTER THE REPORTING PERIOD

AEROSTAR S.A did not identify any events after the reporting date likely to have an impact on the

financial statements related to the financial year ended on 31 December 2022.

As a result of the Tender Offer to buy own shares initiated by Evergent S.A. in December 2022, the

executive management of Aerostar S.A. decided to offer for sale the whole package of shares held.

Given the subscription rate, the Company was able to sell a number of 3.912.279 shares at the price

listed in the Tender Offer.

These individual financial statements which comprise: the statement of the financial position, the

statement of the profit or loss, other elements of the global result, the statement of the company equity’s

modifications, the statement of the cash flows and the explanatory notes to the financial statements

were approved by the Board of Directors on 16 March 2023 and signed on behalf of the Board of

President & General Director

Vice President & Financial Director

The undersigned GRIGORE FILIP, as President of the Board of Directors

and General Director of AEROSTAR S.A. and DORU DAMASCHIN, as Vice-

president of the Board of Directors and Financial Director of AEROSTAR S.A.,

hereby undertake the responsibility for the preparation of the individual financial

statements as on 31.12.2022, and we confirm hereby that:

a) The accounting-financial statement for 2022 that was prepared in

accordance with the applicable accounting standards provides a fair

image, compliant with the reality of the assets, obligations, financial

position, of the profit and loss account of the company Aerostar S.A.

b) The report of the Board of Directors on the financial year 2022, prepared

in accordance with the provisions of Regulation no. 5/2018 issued by the

Financial Supervisory Authority – Annex no. 15 contains a correct review

of the company’s development and performance, as well as a description of

the main risks and uncertainties specific to the activity of Aerostar S.A.

President of the Board of Directors and General Director,

Vice President of the Board of Directors and Financial Director,