Aerostar S A : Independent Auditor's Report on the Financial Statements 2021

Tel: [phone]

Fax: [phone]www.bdo.ro

Victory Business Center Invingatorilor 24 Bucharest - 3 Romania 030922

INDEPENDENT AUDITORS' REPORT

To the Shareholders of Aerostar S.A. Bacău

Headquarters: Bacău, 9 Condorilor Street, Bacău county, România Fiscal Registration: RO950531

Report on the Audit of the Financial Statements

Qualified Opinion

[1] We have audited the financial statements of Aerostar S.A. Bacău (the Company), which comprise the statement of financial position as of December 31, 2021, and the statement of income, the statement of other comprehensive income, the statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

[2] The financial statements as at and for the year ended December 31, 2021 are identified as follows:

•	Net assets/Total equity:	421.388 thousand RON
•	Net profit for the year:	59.940 thousand RON

[3] In our opinion, except of the possible effects of the matters as described in the paragraphs [4] - [5] and except for the effects of the matter as described in the paragraph [6] of Basis for Qualified Opinion section from our report, the accompanying financial statements give a true and fair view of the financial position of the Company as at December 31, 2021, and of its financial performance and its cash flows for the year then ended in accordance with the Order of the Minister of Public Finance no. 2844/2016 for the approval of the accounting regulations compliant with International Financial Reporting Standards.

Basis for Qualified Opinion

[4] The Company recognizes revenue from services related to civil and military aircraft maintenance and repair projects upon completion of the provision of services and the transfer of control of the goods to the beneficiary. Previously, the Company recognized these services as income related to inventories of finished goods and services in progress at their cost of production. Due to the nature of the services provided, they have no alternative use for the Company due to contractual restrictions and practical limitations on the Company's ability to easily establish another use for those assets. Under these conditions, in accordance with the provisions of IFRS 15 Revenue from Contracts with Customers, the beneficiary controls the asset as it is created or improved, and the related revenue should be recognized over time as maintenance and repair services are provided. We have not been able to obtain sufficient and appropriate audit evidence to determine the impact of this departure from IFRS 15 on sales revenue, income related to finished goods and work in progress, and implicitly on the net profit of the current period, as well as the corresponding items in the statement of financial position.

[5] According to the collective labor agreement, the Company provides employees with retirement benefits. In accordance with IAS 19 Employee Benefits, such transactions meet the criteria for recognizing an obligation. The Company did not hire specialists (actuaries) to determine the amount of these obligations for retirement benefits and it did not include estimates of these future payments as of December 31, 2021 and December 31, 2020. Therefore, we were unable to determine those adjustments that may be required to the accompanying financial statements to reflect the requirement of the reporting framework. Any adjustments that may be required would affect the result for the current period, the retained earnings, the employee benefit obligations and the net assets.

[6] As of December 31, 2021, current assets include the amount of 10,189 thousand RON (December 31, 2020: 10,037 thousand RON), which represents the short-term portion of the deferred tax receivables. In accordance with IAS 1 Presentation of Financial Statements, when an entity presents current and non-current assets, as well as current and non-current liabilities as separate classifications in its statement of financial position, it shall not classify deferred tax assets (liabilities) as current assets (liabilities). Consequently, current assets are overstated by 10,189 thousand RON as of December 31, 2021, and 10,037 thousand RON as of December 31, 2020, respectively, and non-current assets are understated with the same amounts, without any impact on the performance of these financial years.

[7] We conducted our audit in accordance with International Standards on Auditing (ISAs), UE Regulation no. 537/2014 of the European Parliament and of the Council ("The Regulation") and Law no. 162/2017 ("The Law''). Our responsibilities under those standards and regulations

are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with International Ethics Standards Board of Accountants Code of Ethics for Professional Accountants ("IIESBA Code") together with the ethical requirements that are relevant to our audit of the financial statements in Romania, including the Regulation and the Law, and we have fulfilled out other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

Key audit matters

[8] Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter Provisions See Note 13 Provisions Provision Recognition Policy is set out in Note 3.2 "Applied Accounting Policies - Accounting Policies for Provisions". As presented in Note 13 to the financial statements, as of December 31, 2021, the Company has total provisions amounting to 131,829 thousand RON, of which long-term provisions amounting to 105,383 thousand RON. The estimation of a provision involves significant professional judgement for the Company's management regarding the probable results of the relevant events and the quantification of the probable related obligations. Due to the importance of the amounts reported in the Provisions item and the fact that, by their nature, provisions imply a significant degree of professional judgment, we consider that these are a key matter for the 2021 audit.

How our audit addressed the key audit matter Our audit procedures included, but are not limited to: • We analyzed the current obligations of the Company based on which the provisions were recognized; • We analyzed the professional judgement used by the Company's Management in determining the probable results of the events and the quantification of the potential obligations; • We obtained from the legal department of the Company, where applicable, the assessment regarding the probability of resolving the ongoing litigations as well as what is the best estimate of the value necessary for the settlement of the obligations deriving from these litigations; • We analyzed the maturity of the obligations underlying the recognition of provisions and their classification in the short and long term.

Other information - Administrators' Report

[9] Administrators are responsible for the preparation and presentation of Other information. The Other information comprise the Administrator's report, including the non-financial representation, and the Remuneration Report, but does not include the financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the Other information and, in doing so, consider whether the Other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

With respect to the Administrator's report, which includes the non-financial representation, we read and report whether the Administrators' report is prepared, in all material respects, in accordance with the Order of Minister of Public Finance no 2844/2016, articles 15-19, respectively 39-42 of the accounting regulations in accordance with International Financial Reporting Standards.

Based solely on the work required to be undertaken in the course of the audit of the financial statements, in our opinion:

• [a] The information given in the Administrators' for the financial year for which the financial statements are prepared, is consistent, in all material respects, with the financial statements;

• [b] The administrators' Report, including the non-financial representation has been prepared, in all material respects, in accordance with OMFP no. 2844/2016, points 15-19, respectively 39-42, of the accounting regulations compliant with the International of Financial Reporting Standards.

• [c] The remuneration report has been prepared, in all material respects, in accordance with the provisions of Law 24/2017, articles no. 106-107.

In addition, based on our knowledge and understanding of the entity and its environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the Administrators' report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

[10] Management is responsible for the preparation of the financial statements that give a true and fair view in accordance with the Order of the Minister of Public Finance no. 2844/2016. and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

[11] In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

[12] Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

[13] Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

[14] As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

• • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.