Budget 2026 (Item 5 on the agenda)

for the year 2026

Revenue from sales

680.000

Income from changes in inventories and capitalised

18.000

CHIEF EXECUTIVE OFFICER FINANCIAL DIRECTOR

ALEXANDRU FILIP DORU DAMASCHIN

for the year 2026

ALEXANDRU FILIP DORU DAMASCHIN

for the year 2026

ALEXANDRU FILIP DORU DAMASCHIN

1. Activity Programme for 2026

   1. Macroeconomic Context

   2. Objectives of the Operating Programme

   3. Risks

2. General Activity Budget for 2026

   1. Budgeting Principles

   2. Underlying Assumptions and Estimation Methods

II.3 General Activity Budget

1. ACTIVITY PROGRAM FOR 2026
   1. MACROECONOMIC CONTEXT

      The global economy will face heightened geopolitical uncertainties in 2026 as well, a contested multipolar landscape, and volatility induced by administrative decisions, generating trade tensions and protectionism. Moderate and fragile economic growth is expected, influenced by pressures on investment and global trade. Inflation is generally expected to decrease, yet major risks persist related to fiscal imbalances, divergent monetary policies between the FED and the ECB, as well as the impact of artificial intelligence on financial markets. Globally, the AI narrative is evolving towards a broader ecosystem, and markets will be less tolerant of weak balance sheets. In Europe, environmental activism is expected to slow down as the current US administration withdraws environmental standards in several industries.

      In 2026, the civil aircraft market for suppliers Airbus and Boeing is driven by a strong recovery in orders, which will lead to higher projected production rates and improved financial performance, despite ongoing supply chain challenges and the need to manage existing engine issues. Airbus is expected to deliver significantly more aircraft than Boeing in 2026, with an estimated 900 Airbus deliveries compared to 708 Boeing deliveries.

      It is within this highly competitive environment that Aerostar SA conducts its core business (manufacturing) as a TIER 1 and TIER 2 supplier, with estimated sales of 380 million RON for 2026, representing 52% of total sales volume.

      For 2026, in their MRO (maintenance, repair, and overhaul) forecasts, Airbus and Boeing indicate that strong demand will continue, driven by aging fleets and the steady growth of passenger traffic. Airbus is the leader in the narrow-body aircraft segment, particularly with the A320 family, while Boeing aims to accelerate deliveries of the 737 and 787 models. Both companies are driving demand in the aftermarket, particularly for digital solutions, cabin upgrades, and operational support services.

      Overall, more intensive use of global fleets, higher MRO spending, and significant expansion in the Asia-Pacific and North American markets are anticipated, as the aging fleet will remain in service for longer.

      Another notable trend highlighted in the forecast is the decline in conversions from passenger to

      cargo aircraft. Given that passenger demand remains high and deliveries of new aircraft are limited, operators and aircraft owners are prioritising the continued operation of passenger-configured aircraft.

      The global defence industry is experiencing rapid expansion, driven by major geopolitical tensions, such as the conflict in Ukraine, instability in the Middle East, and strategic rivalry between the U.S., China, and Russia.

      The increase in defence budgets is evident, with the U.S. promoting a new standard of 5% of

      GDP, while Europe anticipates an industry growth of nearly 30% by 2030. Europe is expanding its production capabilities through consortia and pan-European initiatives. In 2026, Europe adopted a financial loan scheme (the SAFE programme) with a total budget of €150 billion, in the form of longterm loans for EU member states.

      Romania is receiving approximately €16.6 billion in the form of a 45-year loan, with a 10-year guarantee and low interest rates, to be spent by 2030.

      The funds partially finance military projects, such as air defence systems, radars, armoured vehicles, ships, drones, and ammunition. Analysing the 21 military projects for the Ministry of National Defence (MapN), we note that they aim to modernise the armed forces, with a focus on air defence, ground mobility, drones, and communications, involving the domestic industry. Therefore, Aerostar's capabilities are not directly reflected in these projects. However, the Ministry of National Defence will implement new projects that impact the company's operations, such as the modernisation of F-16 aircraft to M6.6 standards.

      For 2026, the Romanian Air Force's requirements regarding the modernisation of the F-16 fleet focus on standardising the entire fleet to a common technological standard and extending the operational lifespan of the aircraft.

   2. OBJECTIVES OF THE ACTIVITY PROGRAMME

      The main objective for the 2026-2030 period is:

      • To achieve an annual increase in revenue so that by 2029, revenue reaches 1.000 million RON, as follows:

      1. MAIN LINE: MANUFACTURE OF AVIATION PRODUCTS

         We are primarily focusing on the following activities:

         • Integration of new aviation assemblies (aerostructures/hydraulics)

         • Increasing the number of primary aerostructure/hydraulic parts and subassemblies by integrating new packages, prioritising existing customers

         • Strengthening the special surface coating and heat treatment processes sector by modernising and expanding production capacities; creating an Eco-friendly Production

           Centre (in compliance with REACH regulations) for the manufacture of complex-geometry components for the aviation industry) and introducing new processes (e.g., HVOF,

           conversion from chromium anodising to boron anodising)

           These activities will contribute to increasing the sales volume by approximately 10-15% compared to 2025.

      2. MAIN LINE: CIVIL AVIATION MAINTENANCE

         We are primarily considering the following activities:

         • Increasing the number of operators (customers) corresponding to the geographical areas of Europe, the Middle East, and Africa.

         • By closely monitoring market opportunities, we will initiate the process of MRO

           assimilation and the addition of new aircraft types to our EASA Part 145 authorisation

         • Assimilation of maintenance work for new categories of components

         • Increasing capacity to ensure simultaneous work on at least 13 Boeing 737 or Airbus A320 aircraft.

           These activities will contribute to increasing the sales volume by approximately 10% compared to 2025.

      3. MAIN LINE OF DEFENCE SYSTEMS

         We are primarily focusing on the following activities:

         • Assimilation of F-16 aircraft modernisation and new maintenance work on the aircraft

         • Assimilation of maintenance processes for F-16 aircraft equipment and the F100 engine powering the aircraft

         • Expansion of MRO capacity, logistical support, and F-16 aircraft platform modernisation for the Ministry of National Defence in line with the growth of the aircraft fleet

         • Increasing MRO and logistical support capacity for S-70 Black Hawk helicopters, in line with the expansion of the helicopter fleet

         • Strengthening capabilities and expertise in the field of ground-based systems (surface-to-surface or surface-to-air missile launch systems, radars).

           These activities will contribute to a 10-15% increase in sales volume compared to 2025.

      4. COMPLEMENTARY BUSINESS LINE, MANUFACTURE OF TOOLS, JIGS, FIXTURES AND GAUGES (ROM. ABBREVIATION SDVs) FOR THE AVIATION INDUSTRY, PROFESSIONAL ELECTRONICS, AND VARIOUS OTHER PRODUCTS/SERVICES

         We are primarily considering the following activities:

         • Diversifying the SDV manufacturing portfolio for the aerospace industry and expanding our footprint as a recognised supplier by extending the product range from small to medium sizes;

         • Focusing resources on developing programs in the professional electronics market and integrating assembly and control devices into devices with complex actuation mechanisms and built-to-spec designs

           These activities will contribute to a 1-2% increase in sales volume compared to 2025.

      5. QUALITY AND SAFETY

         Under the responsibility of the Director of the Quality Directorate, to ensure that our products and services meet applicable requirements and customer expectations, as well as to comply with environmental regulations, the Integrated Quality and Environmental Management System will be implemented, maintained, and continuously improved for the defined products, services, and activities, as well as for the accreditations necessary to deliver these products and services, in accordance with applicable legal requirements, customer requirements, and internal requirements.

         In terms of safety, under the responsibility of the Quality Directorate, the Safety Management System will be maintained and continuously improved in accordance with applicable European regulations within the Production Organization authorised under Part 21G, the Maintenance Organization authorised under Part 145, and the Design Organization authorised under Part 21J, EMAR 145, and EMAR 21.

      6. IN-HOUSE WORKFORCE

         Under the responsibility of the Legal and Human Resources Directorate, activities will be undertaken to strengthen and expand AEROSTAR's capabilities to attract, where appropriate, and to train in-house qualified personnel for each of the company's functions, as well as to create effective tools to ensure adequate working conditions, recruitment, retention, motivation, and continuous professional development in the workplace, with the aim of securing the human resources necessary to achieve the specified objectives.

   3. RISKS

      According to the Risk Barometer 2025 study, major global risks include cyber incidents (1st place), supply chain disruptions (2nd place), and natural disasters (3rd place), alongside increasing climate change, legislative changes, as well as tariffs or sanctions. Added to all this are macroeconomic factors (inflation, deflation). In the aviation industry, in addition to these, there are supply chain disruptions, delays in engine deliveries, and maintenance and MRO backlogs, which are expected to persist until 2031-2034. Trade tensions (U.S. tariffs, Chinese restrictions on rare components) cause significant logistical and financial damage. All these risks, which affect the global economy and the aviation industry, will manifest with varying intensity in the company's future operations.

      In addition to these, the company will continue to face operational and financial risks specific to each business line, the most significant being those related to supply chain bottlenecks and the shortage of qualified personnel; however, these are considered to be at a moderate risk level.

      Through the implementation of internal procedures for identification, root cause analysis, and action programmes, these risks are not expected to have a significant impact on the company's operations.

2. GENERAL OPERATING BUDGET
   1. PRINCIPLES OF BUDGET PREPARATION

      In preparing the revenue and expenditure budget for 2026, we have applied the following principles:

      − Going concern

      − Consistency of accounting policies

      − Prudence

      − No offsetting of revenues and expenses; they are recognised separately

      − Historical cost

      − Substance over form

      − Matching of expenses to revenues

      − Materiality

   2. UNDERLYING ASSUMPTIONS AND ESTIMATION METHODS

Key assumptions include realistic forecasts based on:

• market trends

• macroeconomic conditions;

• historical data.

  Macroeconomic assumptions

  − Forecast inflation for the end of 2026: 4% (an average annual inflation rate of 6.5%);

  − Forecast exchange rates for 2026:

  1 euro = 5,0 RON 1 US dollar = 4,5 RON Operational assumptions

  − A 5-10% increase in prices for raw materials and purchased materials;

  − A production budget designed to ensure the achievement of the projected sales volume;

  − Bank interest rates ranging between 4,5% and 7%;

  − A production structure broadly consistent with previous years;

  − The share of major costs in operating revenue, estimated based on historical data;

  − Salary additions, in accordance with the current Collective Labour Agreement, consisting of:

• bonuses;

• social benefits;

• reimbursement of employees' transportation costs;

• meal tickets and holiday vouchers.

  The General Activity Budget, contains information regarding the estimated targets for the year 2026, relating to:

• revenue;

• expenses;

• results/profit;

• capital expenditures;

• sources of financing for capital expenditures.

  The maximum amounts of capital expenditures will be committed based on the decision of the Management Committee, depending on their necessity and appropriateness.

  The budgeted revenue and expense items in the General Activity Budget were estimated based on the figures outlined in the company's Business Strategy for the period 2025-2029.

  For the main budgetary chapters of the company's General Activity Budget, the following amounts have been estimated:

  Explanations	Planned 2026 k RON
  Total operating revenue, of which:	700.000
  Revenue from sales	680.000
  Operating expense	638.863
  Operating profit/(loss)	61.137
  Financial income	26.000
  Financial costs	11.000
  Net finance income/(costs)	15.000
  Total revenue	726.000
  Total expenses	649.863
  Profit before tax	76.137
  Net profit	63.955
  Capital expenditures	65.000
  Sources of financing for capital	65.000
  expenditures - own sources

  Basis for operating revenue

  For the year 2026, operating revenue is estimated at 700.000 thousand RON, representing an

  increase of 10,4% compared to the actual figures for 2025. Operating revenue consists of:

  − Revenue from sales amounting to 680.000 thousand RON

  − Income from changes in inventories and capitalised production amounting to 18.000 thousand RON

  − Other operating income amounting to 2.000 thousand RON.

  Revenue from sales for 2026, totalling 680.000 thousand RON, is based on the following business lines: Item. No. Business line %

  1. Manufacture of aeronautical products	52%
  2. MRO civil aviation	29%
  3. Defence systems	17%
  4. Other products and services,	2%
  including SDV manufacturing and
  other activities
  TOTAL	100%

  Basis for operating expenses

  For the year 2026, operating expenses are estimated at 638.863 thousand RON, consisting of the following categories:

  Explanations Planned 2026 (k RON)

  Cost of raw materials and consumables	287.150
  Employee benefits expenses	268.213
  Expenses related to depreciation of property, plant and equipment	32.000
  Expenses for services and other operating expenses	49.000
  Net impairments and provisions	2.500
  Total operating expenses	638.863

  Cost of raw materials and consumables

  In estimating total material expenses for 2026, the proportion of expenditures in previous years was taken into account, as well as the fact that the production structure for 2026 is similar to that of 2025. Based on these considerations, material expenses are estimated at 287.150 thousand RON, representing 41% of the estimated operating revenue.

  Employee benefits expense

  The estimation of employee benefits expense for 2026 was based on the following assumptions:

  • a total of 2.160 employees, including those hired through temporary employment agencies, according to the organisational chart approved for 2026;

  • an estimated average salary of 8.645 RON per employee,

as well as the provision of the following benefits, in accordance with the current Collective Labor Agreement:

− bonuses;

− meal vouchers;

− vacation vouchers;

− Christmas and International Women's Day gifts;

− transport allowances for commuting employees;

− social benefits and medical leave costs covered by the company.

− employer taxes and contributions according to fiscal regulations (work insurance contribution -2,25% of gross salary, contribution to the disability fund - 4% of the national minimum wage), averaging 3,65%.

For 2026, employee benefits expenses are estimated at 268.213 thousand RON, representing 38,32% of estimated operating revenue.

For the year 2026, depreciation and amortization expenses for property, plant and equipment, intangible assets, and investment property are estimated at 32.000 thousand RON, representing 4,57% of estimated operating revenue.

For the year 2026, expenses for services and other operating expenses are estimated at a total amount of 49.000 thousand RON, based on historical levels, representing 7% of operating revenue.

The estimated operating expenses also include costs related to the following items:

1. Expenses for participation in fairs and exhibitions and promotional materials;

2. Training and professional development expenses;

3. Scholarship expenses;

4. Research and development expenses;

5. Current environmental protection expenses;

6. Expenses for improving occupational health and safety conditions;

7. Expenses related to the Aerostar quality management system.

For the year 2026, capital expenditures are estimated at 65.000 thousand RON.

The commitment of capital expenditures is the statutory responsibility of the Management Committee, which assesses their necessity and appropriateness in accordance with Aerostar's internal procedures.

For the capital expenditures estimated for 2026, the company has the capacity to fully finance them from its own sources.