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ANNUAL REPORT

under N.C.T.S. Regulation no. 5/2018 for the financial year 2021

 

 

 

 

 

Date of the report: 29.04.2022

Denomination IAR S.A.

Registered Office: No. 34, Herman OBERTH Street, Ghimbav city, Brasov county

Telephone/ fax number: 0268-475107; 0268-476981

Sole Registration Code with the Trade Registry: 1132930

Serial number in the Trade Registry: J08/IV/21.01.1991.

Regulated market where the issued securities are traded: The Bucharest Stock Exchange, the Equities Sector - Standard Class actions

Subscribed and paid capital: 47,197,132. 50 RON

The main characteristics of the securities issued by the company: 18,878,853 nominal shares, dematerialized, having a nominal value of 2.50 lei each.

 

 

1.     ANALYSIS OF IAR S.A.'S ACTIVITY

 

1.1.a. The core activity of the company

The main activity carried out by the company is the one set out in Class 3030 - "Manufacturing of aircraft and spaceships”, which belongs to Group 303 - "Manufacturing of aircraft and spaceships”, division 30 – “Manufacturing of other means of transport”

The object of activity (both the primary and the secondary), stipulated in the Constitutive Act of IAR S.A., consists of activities defined and codified in accordance with the Classification of Activities of the National Economy - NACE, as updated by Order No. 337 /20.04.2007, issued by the President of the National Institute of Statistics.

1.1.b. IAR S.A. was founded on 28.01.1991 by the reorganization of the Aeronautics Manufacturing Enterprise Ghimbav, the legal basis for constitution being the G.D. 1200/1990.

1.1.c. Mergers or significant reorganization during the financial year 2021 - not applicable.

1.1.d. Purchases or disposals of assets

In 2021, IAR S.A.did not alienate share capital.

During the year under review, the company made a series of upgrading of its production facilities, purchases of machine-tools, production accessories, small equipment and IT products, amounting 12.500.000 lei. This value contains payments made for the upgrade works of the procution facilities (helicopters final painting, helicopters ground tests and flight tests hangar, spedition compartment, Firefighting space, garage, central pavilion, other productive spaces) and purchase of machine-tools and equipment.

Such acquisitions are set out in section 2.1.

1.1.e. The economic and financial results registered by the company at the end of 2019 show that IAR S.A. registered profit incurred both by its operational activity (labor) and by its overall activity, the company continuing to be a profitable company.

 

1.1.1.  Items of general evaluation

At the end of 2021, the major financial indicators registered by IAR S.A. are as follows:

 

 

 

IEB FORECASTS 2021 (lei)

ACHIEVED 2021 (lei)

1. Net turnover

279.647.000

329.506.603

2. Sold output

218.162.000

205.123.178

3. Total revenues, of which:

284.347.000

336.311.209

   - operating revenue

280.347.000

330.692.180

   - financial revenue

4.000.000

5.619.029

4. Total expenses, of which:

258.347.000

309.786.521

   - operating expenses

253.247.000

307.456.771

   - financial expenses

5.100.000

2.329.750

          of which: interests

3.500.000

1.498.033

5. Gross profit

26.000.000

26.524.688

6. Net profit

21.840.000

23.488.292

 

About the quality management system (QMS) implemented in  IAR S.A., we state the following:

- the quality management system implemented at IAR S.A.,  is certified by AEROQ Bucharest both in accordance with SR EN 9100 (certificate no. 004A- originally issued in 2008 and renewed every three years with annual surveillance, the last recertification on 14.05.2021, expiring on 13.05.2024) and according to SR EN 9001 (certificate no. 007 originally issued in 1997 and renewed every 3 years with yearly surveillance audits, the latest re-certification given on 14.05.2021 expiring on the 13.05.2024).

- IAR S.A. is authorized by the Romanian Civil Aeronautical Authority, both as an organization of production under EASA PART 21G (Certificate RO.21G.0006, originally issued in 2007, with unlimited validity and annual surveillance, current issue 30.08, 2021) and as a maintenance organization under the EASA PART 145 (Certificate RO.145.009 / 2009 originally issued in 2009, with unlimited validity and annual surveillance, current issue 21.10.2020)

- The company is certified by Airbus Helicopters Romania SA as a supplier for the military products namely for maintenance works on the airframes of Puma and Alouette III helicopters, PUMA helicopter equipment maintenance, manufacturing of spare parts for Puma and Alouette III helicopters, laboratory testing, metrology, and for manufacturing of spare parts and subassemblies for Airbus Helicopters, former Eurocopter SAS (initially Certified in 2010 and renewed annually).

- IAR SA is certified by the military body within the Ministry of National Defense of Romania-OMCAS in accordance with the requirements of NATO-AQAP2110 for the design and production of aircraft systems and equipment for aviation, upgrade of aeronautical products, spare parts for aircraft, checks, testing, maintenance and repair of aeronautical products (Certificate no. 11 originally issued in 2012, with annual surveillance, renewed on 24.06.2020, valid until 23.06.2022).

 

1.1.2. Technical level assessment of IAR S.A.

1.1.2.1. The main products manufactured and services provided

The products and services offer of the company may be structured as it follows:

-    IAR 330L Puma helicopters (SNIAS AEROSPACE license, currently Airbus Helicopter): pre-owned and related services (manufacturing of spare parts, maintenance, repairs, upgrades, training pilots and technicians, technical assistance);

-    IAR 330L Puma SOCAT, SOCAT NATO and NAVAL- Search and Rescue helicopters: 330 L Puma helicopter upgrade with an advanced system of avionics and weaponry SOCAT, SOCAT NATO and NAVAL Search and Rescue;

-    330 PUMA SM helicopters: upgrade of the 330 Puma helicopter with Makila 1A1 engines, 4-axis autopilot, new avionics integrated system, monitoring system of the operating parameters of the engine, etc.

- IAR 316 B Alouette III helicopters (SNIAS AEROSPACE license, currently Airbus Helicopters):  second hand and related services (manufacturing of spare parts, maintenance, repairs, overhauls, upgrades, training pilots and technicians, technical assistance, etc)

The dynamics of the products' offer is a consequence of the following actions:

- progress in recent years, of the following upgrade programs:

          - IAR 330L Puma helicopter upgrade with SOCAT, NATO and NAVAL systems;

            - SA/IAR 330 Puma helicopter upgrade to the SA 330 SM version;

            - IAR 330 L Puma Search&Rescue version upgrade.

1.1.2.2. Sales Markets

a. Current markets

 

The national market (Romania)

The main local customers of the company's products are:

-     The Components of the National Defense System, Public Order and National Security: the Ministry of National Defense, the Romanian Intelligence Service, the Ministry of Interior

-      Airbus Helicopter Romania S.A. (former Eurocopter Romania S.A.)

For the above-mentioned, IAR S.A. runs maintenance, repair and overhaul services for 316B Alouette III and IAR IAR 330 Puma helicopter fleets held by local beneficiaries (M.O.D, M.A.I., R.I.S.), as well as upgrade services, according to requirements of their beneficiaries.

IAR SA cooperates with the joint venture company Airbus Helicopters Romania S.A.(former Eurocopter Romania S.A.), by providing maintenance and repair services for helicopter parts, as well as providing spare parts for the SA 316B Alouette III and SA 330 Puma helicopters for own use.

In 2018, Framework Agreements were concluded with the Ministry of National Defense, for the period 2018-2021, which aim to carry out the overhaul on 8 IAR 330 Puma SOCAT helicopters belonging to the Air Force General Staff (SMFA).

Based on this framework agreement, in 2021 the last 4 IAR 330 Puma SOCAT helicopters were repaired. Thus, on 31.12.2021 the framework agreement is concluded and IAR SA has concluded the obligations of the framework agreement for the overhaul of IAR330 Puma helicopters.

In 2019, a Framework Agreement was concluded with the Ministry of National Defense, for the period 2019-2024, which have as objective the overhaul and modernization of the IAR 330 Puma NATO helicopters belonging to SMFA. Based on this framework agreement, some of the helicopters of this beneficiary were repaired in 2021 and subsequent contracts were concluded for the repair of a new batch of helicopters, with delivery deadlines 2022 - 2024.

In 2020, a Framework Agreement was concluded with the Ministry of National Defense, for the period 2020-2024, which aims to apply the Ro34-13 / 2019 Service Bulletin to IAR 330 Puma SOCAT military helicopters. In 2021, 4 (four) contracts were concluded. Also, other 3 (three) subsequent helicopter contracts were concluded with a deadline for completion and delivery in the years 2022 - 2023.

Based on the Framework Agreement with the Ministry of National Defense, for the period 2020-2024, which aims to carry out the capital repair works of IAR 330 Puma NAVAL helicopters from the General Staff of the Naval Forces (SMFN), the supply of spare parts, repair services at some equipment and aggregates required for the maintenance of the helicopters provided. In 2021, works were performed and spare parts were performed based on 2 (two) subsequent contracts and another 2 (two) subsequent contracts were signed with delivery deadlines in 2022.

In the period 2020 - 2021, the following contracts were concluded with the Ministry of National Defense, beneficiary of SMFA:

• Contracts for the supply of major aggregates, equipment and spare parts in order to provide logistical support during the life cycle of military helicopters type IAR 330 L - Retrofit and Upgraded, and military helicopters type IAR 330 L / M / S and for training military helicopters and training type IAR316B Alouette;

• Contracts for the provision of repair and maintenance services for IAR330 Puma and IAR316B Alouette equipment and helicopters, as well as technical assistance works at the headquarters of the beneficiary military units.

In 2021, a framework agreement was signed with the Romanian Intelligence Service for the period 2021 - 2024, having as object the provision of products and services for IAR330 Puma helicopters. 5 subsequent contracts were signed and finalized in 2021.

A Service Framework Agreement was also signed on repair services, service, technical assistance at the beneficiary's premises, logistical support and the provision of spare parts and consumables related to these services for the maintenance of IAR316B helicopters provided by the General Inspectorate. of Aviation (IGAv) of the Ministry of Internal Affairs (MAI).

Sales by product type on the local market

Percentage of total sales on the local market

y.2018

y. 2019

y. 2020

y. 2021

IAR 330 PUMA helicopters upgrade+ Overhaul, IAR 316B helicopters Overhaul, IAR 330 and 316B Helic. Major repair works

58,90%

58,97%

45,49%

43.91%

Spare parts and services for helicopters

29,60%

39,87%

48,82%

53.59%

Aircraft –related miscellaneous

10,20%

0,14%

2,87%

0.64%

Non-aircraft-related miscellaneous

1,30%

1,02%

2,82%

1.86%

 

International market

The main external customers / markets for the company's products are:

-          Lebanese Air Force - LEBANON

-          Pakistani Army/ Aviation (by AEROTEH SA) - PAKISTAN

-          AIRBUS HELICOPTERS FRANCE/GERMANY (by AIRBUS HELICOPTER ROMANIA S.A.)

For the above-mentioned, IAR S.A.  runs maintenance, repairs and overhauls, spare parts supply and services for 316B Alouette III and IAR IAR 330 Puma helicopter fleets held by external beneficiaries.

In 2021, IAR SA concluded an important collaboration agreement with DGP Pakistan Army Aviation for the capital repair of 330 PUMA SM helicopters at IAR SA and the respective support through spare parts, equipment repairs, services of 330 PUMA helicopters operated by the Pakistani partner.

IAR SA provides maintenance and repair of helicopters components services, spare parts for the SA 316B Alouette III and SA 330 Puma helicopters for the supply chain of AIRBUS HELICOPTERS.

 

Sales by product type on the external market

Percentage of total sales on the external market

 

y. 2018

y. 2019

y. 2020

y. 2021

upgraded helicopters

0,00%

0,00%

0,00%

0,00%

spare parts and services for the helicopters

100,00%

100,00%

100,00%

100,00%

airplanes – spare parts and repair services

0,00%

0,00%

0,00%

0,00%

 

The pro-rata of each product/service of all sales in the historical period:

Sales by type of product

 

Percentage of total sales

y. 2018

y. 2019

y. 2020

y. 2021

IAR 330 PUMA and IAR 316B helicopters upgrade+ Overhaul, IAR 330 PUMA and IAR 316B helicopters revisions.

56,20%

58,63%

43,45%

43.91%

IAR 330 and 316B Helic.major repair works, spare parts and services for helicopters

32,80%

40,21%

52,07%

53.59%

Aircraft-related miscellaneous

9,70%

0,14%

2,73%

0.64%

Non-aircraft –related miscellaneous

1,30%

1,02%

1,75%

1.86%

 

b. Potential markets

Potential local market

IAR SA aims to ensure service maintenance, repair and overhaul services for 316B Alouette III and IAR 330 Puma helicopter fleets held by local beneficiaries (M.O.D., M.A.I., R.I.S.), as well as upgrade services, according to requirements of their beneficiaries.

IAR SA aims to continue in the future its cooperation with the joint venture company Airbus Helicopters Romania S.A.(former Eurocopter Romania S.A.), by providing maintenance and repair services for helicopter parts, as well as providing spare parts for the SA 316B Alouette III and SA 330 Puma helicopters for own use and for the supply chain of Airbus Helicopters.

IAR SA  is  also  concerned with the involvement in meeting the currently existing off-set obligations and that will  result

following the initiation of strategic programs to equip the public institutions in Romania in the following directions:

a)      manufacturing of aircraft structures activities

b)      manufacturing activities for aircraft electrical wiring and electric panels for aircraft

c)      other aviation-profiled activities.

 

Potential external market

IAR SA:

-    aims  to increase the volume of orders and services under the Follow on Support Contract concluded with the Lebanese Air Force for its fleet of Puma SM 330 helicopters

-    aims to conclude a contract for overhaul / upgrade of 330 Puma SM helicopter fleet owned by GHQ UAE Armed Forces

-    aims to conclude manufacturing contracts for spare parts / assemblies for SA 316B Alouette III and IAR / SA 330 PUMA helicopters to support helicopter fleets held by various beneficiaries, as well as for the international distribution chain of Airbus Helicopters.

 

1.1.2.4.   New products in question, which will need a substantial amount of assets affected to in the financial year 2022:- not applicable

 

1.1.3. Evaluation of technical and material supply activity

Given that the manufacturing/repair of aircraft fully complies with both requirements on materials and on equipment used, and with the requirements under which suppliers must have specific authorization, technical and material supply was made mainly from import, from certified suppliers.

IAR S.A. chose established, world-renowned companies as external suppliers, such as Airbus Helicopters, Elbit Systems, Rokwell Collins, Safran, Thales, Northrop Grumann, etc. . The products purchased from them give the guarantee of quality, reliability and safety in operation.

The main local suppliers are, on the one hand, those working in the field of aeronautics (Turbomecanica SA, Aeroteh SA and Aerofina SA in Bucharest, Aerostar SA Bacau, Airbus Helicopter Romania SA) and, on the other hand, suppliers of raw materials which meet the quality standards required by manufacturing licenses used by IAR S.A..

Long-lasting cooperation with local providers confer the security of contractual relationships concluded by IAR  S.A. with them.

Prices are established through direct negotiations with the suppliers.

The company ensures its utilities, under contract, from Electrica S.A. Brasov Branch - electricity, Distrigaz S.A. Brasov Branch - methane gas, R.A. Olt Water Directorate Rm Valcea, S.G.A. Brasov - water.

 

1.1.4. Evaluation of the sales activity

1.1.4.1. The evolution of sales on the local and external markets. Perspectives

Capitalization of the company's products in 2021 was achieved both on the local market (93.58% of total sales), as well as on the external market (6.42% of total sales).

a. Export activity

Export sales actions were conducted on the following distinct relationships: Lebanon MOD, Pakistani MoD.

The value of exports under the orders and contracts of 2021 amounted to 7,238.65  thousand  lei.

Comparing the period 2018-2021, in terms of types of product recovery, shows that no changes occurred in the exports' structure:

% of achieved annual export

upgraded

helicopters

spare parts and services for helicopters

airplanes - spare

parts and repairs

y. 2018

0%

100%

0%

y. 2019

0%

100%

0%

y. 2020

0%

100%

0%

y. 2021

0%

100%

0%

 

 

b. Sales on the local market

Locally there were developed and implemented in 2021 orders and contracts amounting to 325,229 thousand lei (VAT excluded). This value represents helicopters upgrade, product, repairs / overhauls of helicopters, spare parts, services, technical assistance and materials as follows:

1. the National Security System components (MOD, MAI, RIS): 285,468  thousand lei (VAT excluded),

2. various local customers: 39,762  thousand lei (VAT excluded).

 

c. Opportunities. The prospect of sales on medium and long term

- the local market

1     IAR SA interest in providing maintenance, repairs and overhauls for the helicopter fleets of IAR 316 Alouette III and IAR 330 L PUMA owned by internal beneficiaries (MoD, MoI, RIS), as well as works of their upgrade, according to the requirements of the beneficiaries.

2    Continuing the collaboration with Airbus Helicopters Romania SA, by providing maintenance and repair of helicopter components, as well as the works on the spare parts manufactured by IAR SA for the helicopters SA316 B Alouette III and SA330 Puma, both for its own use, as well as for the Airbus Helicopters distribution chain.

3   Involvement of IAR SA in covering the existing offset obligations and those that will arise as a result of the initiation of the strategic programs for the endowment of public institutions in Romania, as follows:

a. manufacturing activities of aircraft frames

b. Activities of manufacturing electrical wiring and panels for aircraft

c. other aviation-oriented activities

4   Involvement of IAR SA in the future helicopter acquisition programs of the institutions within the National Defense System:

The involvement of IAR SA in the multi-role helicopter program will be made in accordance with the provisions of the Definitive Cooperation Agreement signed between Airbus Helicopters and IAR SA and having as object the industrial and commercial cooperation regarding the execution of IAR-H215M Helicopter Customization Works, and turning it into IAR-H215M, Subassembly Manufacturing and Maintenance works (MRO) throughout the lifecycle of this helicopter, as well as the manufacturing of other components for the Airbus Helicopters manufacturing and distribution chain.

IAR SA will be the first contractor in relationship with the Romanian MOD to purchase this type of helicopter, and will be authorized by Airbus Helicopters as the IAR-H215M Helicopter Customization Center.

On the same model, a cooperation agreement is signed for the customization of the H145M multi-role helicopter for the Ministry of Defense.

IAR SA is interested in entering a partnerships for the industrialization of any helicopter models needed by the National Defense System Forces, as well as for ensuring the maintenance, repair and overhaul of these types of helicopters, throughout their life cycle.

- the external market

1    IAR SA involvement in overhaul and upgrade works for 330 PUMA SM helicopter fleets operated by Pakistan Aviation Army, Lebanese Air Force and Naval Aviation Group UAE, including ongoing support with spare parts, services and equipment repairs.

2   IAR S.A. plans to take over the off-set obligations relating to public procurement contracts concluded by the Romanian government bodies with foreign companies.

 

1.1.4.2. The competitive situation in the business environment of the IAR S.A. Company

The main competitors of the IAR S.A. Company's products are the following:

 

Crt.no.

Product or group of products

Competitor

on the local market

on the external market

1

PUMA helicopter

Airbus Helicopters with H215, Ukraine and Russia (Aviakon and Kazan Helicopters) with Mi-8, Mi-17

Airbus Helicopters – H215/H225, Sikorsky USA – S92, UH 60L, NH Industries (European corporation) – NH 90, Kazan Russia – MI 17, MI117

2

IAR316B helicopter (currently, IAR S.A. no longer offers newly manufactured  IAR316B helicopters)

Airbus Helicopters SAS – AS 350/355, EC120, EC135/635, EC 155, Bell Helico-pter Textron – Bell427, Bell 429i, Bell430, Bell412, Bell206, Bell407, Agusta Italy – A109 Power, A119 Koala, Robinson USA – R44, R22, MDHelicopters Belgium – MD500/600

Airbus Helicopters SAS – AS 350/355, EC120, EC135/635, EC 155, Bell Helicopter Textron – Bell427, Bell 429i, Bell430, Bell412, Bell206, Bell407, Agusta Italia – A109 Power, A119 Koala, Robinson USA – R44, R22, MDHelicopters Belgium – MD500/600

 

1.1.4.3 The dependence of the company on a single customer or on a group of customers

The local beneficiaries of IAR S.A.'s products and services are components of the National Defense System, Public Order and National Security (M.O.D., M.O.I. and R.I.S.).

In order to observe the conditions for maintaining the airworthiness of the helicopter fleets owned by these local customers, it is necessary to periodically perform maintenance/repair/overhaul works and services, so that the budget allocations for these institutions have a strong impact on IAR S.A..

 

1.1.5. Evaluation of the company's employees/ personnel aspects

1.1.5.a The number and level of training of the company's employees. The unionization degree

In the organization structure of IAR S.A. the following can be identified:

a)    the departments directly subordinated to the General Manager of IAR  S.A., including the Quality Department;

b)   the Development-Production Division, which includes the design, software/calculation/certification departments and training departments/production follow-up, engineering, production facilities;

c)    the Economic and Commercial Division, which includes the economic and commercial departments.

On the 31st of December 2021, the company had the following personnel structure which does not differ substantially from the years 2019 and 2020:

- chief executive officers

2

- heads of departments

18

- upper education

96

- specialized secondary education

27

- foremen

8

- technical quality inspectors

7

- workers

192

-support workers

9

- understudies workers

4

The average age of the personnel employed in IAR S.A. at the end of 2021 was 49 years at company level, considering that the average age with men was of 49.5 and with women of 48.5. On the 31st of December 2021, men represented 76.08% of the total personnel, the difference being represented by women.

Of the total employees of the company, 61.68% are members of the Free Independent Union "ICA”.

1.1.5.b Relationship between the manager and employees. Conflicting elements.

The foundation of labor relations within IAR S.A is the Collective Labor Agreement applicable at company level. Both the Management and the Executive Boards of IAR S.A. consistently showed an attitude of cooperation and understanding towards the employees of the company and, therefore, the representatives of F.I.U. "ICA". During 2021, in IAR S.A., no labor disputes or conflicting elements were recorded.

1.1.6. Evaluation of the impact of IAR S.A.'s core business on the environment in 2021

IAR SA's activity is regulated in terms of environmental protection by means of the Integrated Environmental Authorization no. BV1 of 18/07/2014 issued by the Environmental Protection Agency Brasov, revised on 24.05.2019, valid until 18.07.2024, which also includes the Water Management Authorization no. 66 of 09.06.2021 issued by the Water Management System Brasov, valid until 09.06.2026.

In these regulatory acts are set the conditions and operating parameters for existing activities, ensuring that the unit complies with the provisions concerning integrated pollution prevention and control.

Environmental protection activities during 2021 were conducted in accordance with the specific requirements of environmental legislation and requirements of three environmental permits held by IAR SA.

It should be noted that IAR S.A. has taken all necessary steps to obtain the environmental permits required by the town planning certificates related to the retrofit / upgrade / relocation works performed on the fixed assets Final Painting Workshop, Firefighting Space and Garage.

In 2021, the company monitored the quality of the environment: water, air, soil, in collaboration with companies and accredited laboratories: ECOSIMPLEX NOVA Bucharest for air emissions, ECOBREF Brasov for speciality audits and documentation in the field of environment, SGA Brașov for the analysis of discharded waste water, REMAT Braşov, COMPREST, SC CALYPSO MONO SRL and  SC ECO ELA IMPORT EXPORT SRL for removal and disposal of hazardous waste resulting from the activity of the company. In 2021 the  minimum 2 mg/l for ammoniacal nitrogen, respectively 2.75 mg/l ammonium in the wastewater has been exceeded. As a result of this fact, the company's management decided that together with the construction of the International Airport, located in the vicinity of our company, to take the necessary steps to connect to the sewerage network of the Apa Brașov Autonomous Authority.

All required reports were made by both the authorization and other reports and statements required by the Brasov Environmental Protection Agency, the National Agency for Environmental Protection, the Ministry of Environment, the Ministry of Water and Forests, the Water Management System Brasov.

During checks on the line of environmental protection and environmental law compliance made by the Environment Guard - Brasov County Commission, the Romanian Waters National Administration -Division Olt Basin and the Water Management System Brasov, it has been found that IAR SA meet their environmental obligations.

 

1.1.7. Evaluation of the research and development activities – the company does not carry out research and development activities, thus having no necessity in applying specific policies in this field.

In IAR S.A. there is a design department undergoing certification as per RMAR 21J. The design workshops ensure the support for the production and maintenance activities and achieve the projects regarding the helicopter upgrades, according to contractual requirements.

In the course of 2021, the design organization of IAR SA carried out a series of technical analyzes to establish the technical specifications and started the design activities of new systems, proposed to be mounted upon the major repair of helicopters:

  • replacement of physically and morally worn equipment in the IAR 330 L Puma SOCAT helicopter avionics systems;

  • replacement of equipment on the IAR 330 L Puma NATO helicopter gyro navigation system;

  • extension of operational capabilities for IAR 330 L Puma NAVAL helicopters.

The systems have undergone internal approval procedures, certification with the National Military Aviation Authority and qualification with the customer.

The IAR design organization has started activities to define new product variants that meet the requirements of the Naval Forces.

 

1.1.8. Evaluation of the company's activity on risk management

By nature of the activities carried out, the company is exposed to various risks, which include: currency risk, interest rate risk, liquidity risk, credit risk.

 

The currency risk: The Company is exposed to fluctuations in the exchange rate for the cash, receivables and liabilities entered in other currencies, mainly USD and Euro.

The company, depending on its possibilities, at a certain time, using different currencies, buys the respective currencies that it needs to complete the necessary import payments from different suppliers. The risk of exchange rate changes did not have a significant impact in 2021, despite a sharp deterioration of the exchange rates RON / euro and RON / USD, thanks to an active management and monitoring of the situation.

The Company did not use derivative financial instruments for protection against currency fluctuations.

The interest rate risk: The operating cash flows of the company are not affected by movements of the interest rate on the banking market, since currently the company  uses a credit line that provides the issuance of bank guarantee letters necessary for commercial contracts and financing of production, where appropriate.

The liquidity risk (cash-flow): The company's management has applied and applies a prudent liquidity risk management, pursuing continuously the maintainance of sufficient cash in order to be able to meet all due payments.

The finance facility provided by the company's credit line reduces the liquidity risk.

The credit risk: The company carries out commercial relations only with certified third parties, which justifies the financing on credit. The company's policy is that all customers wishing to conduct business relationships under credit conditions should be subject to verification procedures. Moreover, debt balances are permanently monitored, resulting in a negligible exposure of the company to the risk of non-receivable debts.

The management of the company, depending on the current situation on the market, made arrangements for continuation of work in terms of profitability. It has been pursuing and is further pursuing the minimization of the potential negative effects associated with the risk factors presented on the financial performance of the company.

The Company conducts business relationships only with recognized third parties.

As shown in the Internal Regulation of the Board of Directors of IAR SA, the company has established an effective framework for risk identifying, monitoring and management.

A risk management system, which is described in chapter 3 - The corporate governance statement is implemented in the company.

The Company is not subject to any patrimonial legal claims.

 

1.1.9. Elements of perspective on the company's activity

1.1.9.a Presentation and analysis of trends, items, events or uncertainty factors that affect or could affect the company's liquidity compared to the same period last year

IAR S.A. intends to provide maintenance, repairs and overhauls for the helicopter fleets IAR 316B Alouette III and IAR 330 PUMA owned by internal beneficiaries, as well as upgrade works according to the requirements of the beneficiaries, having concluded a series of framework agreements, as follows:

- Framework Agreement with the Air Force Major for the major overhaul of IAR 330 PUMA NATO helicopters - 2021-2024

- Framework Agreement concluded with the General Staff of the Naval Forces for the major overhaul of IAR 330 PUMA NAVAL helicopters, 2020-2023

- Helicopter maintenance contracts with external partners for PUMA SM helicopters

Running these agreements, in the following years the company IAR is able to load their production capacities and those of its authorized subcontractors: Turbomecanica SA Bucharest, Aerostar SA Bacau, Aerotech SA Bucharest and Aerofina SA Bucharest.

As arises from the action program which puts into practice the development strategy of the national security industry in the aeronautic field:

- IAR S.A. will be involved in the national program for the purchase of helicopters by the institutions of the National Defense System / other budgetary institutions - a program for the next 10 - 20 years,

- IAR S.A. will take the necessary measures to become a national center for helicopters maintenance as per the Law 232 / 2016.

All measures contained in this program will influence positively, significantly, the dynamics of IAR S.A. on medium and long term.

 

In parallel, IAR S.A. is looking for orders from other aviation companies, including participation in covering their offset obligations.

However, should IAR SA become involved in the series manufacturing program of some subassemblies and electrical wiring for the H215 helicopters that are to be manufactured by Airbus Helicopters in its new investment on the IAR Brasov platform, the policies, strategies, activities and operations of the company will be significantly influenced.

In the future, IAR S.A. will continue to provide facilities and services for all economic agents within the Aeronautical Technology Park Brasov.

Also, IAR S.A. may initiate/participate in other programs within the Aeronautic Technology Park, in connection with starting the construction project of the International Airport Ghimbav - Brasov, such as the development of airport facilities, providing heliport services, involvement in programs for maintenance/upgrading of airplanes, assets rental.

 

The evolution of the current liquidity and immediate liquidity indicators over the last 4 years is as follows:

 

Indicator

Analyzed period

 

31.12.2018

31.12.2019

31.12.2020

31.12.2021

Current liquidity indicator

2,78

3,38

3,39

2,42

Immediate liquidity indicator

1,01

0.72

0,61

0,72

 

1.1.9.b The presentation and analysis of the effects of capital expenditures, current or anticipated, on the financial statements of IAR SA  compared to the same period last year not applicable

 

1.1.9.c The presentation and analysis of the events, transactions, economic changes that significantly affect revenues from the core activity

Products and services that the company capitalizes both locally and for export are meant mainly for budgetary users who, basically, are part of the national systems of safety and security forces.

For this reason, the number of agreements depends heavily on the beneficiaries’ needs, especially on the budgetary allocations related thereto.

Increasing the budget allocations for the Ministry of Defense at 2% of GDP will have positive effects on IAR SA, by increasing its activity and hence the company's annual business/net income.

In addition, implementing the development strategy of the security industry will significantly affect revenues from the core activity of the company.

The conclusion of PUMA SM maintenance contracts will lead to a significant increase in export volume in the coming years.

If IAR SA becomes involved in the series manufacturing program of the helicopters that are to be purchased by Romania, the policies, strategies, activities and operations of the company will be significantly influenced.

 

2.          TANGIBLE ASSETS OF THE COMPANY IAR S.A.

2.1        The location and characteristics of the main production capacities owned by IAR S.A.

Currently, IAR S.A.'s assets are initially placed into 8 buildings, distinctively highlighted in the patrimonial registers of the company.

The stated objectives of the company regarding its products and services  offered to its main customers (see the presentation at Chapter 1.1.2) lead to the achievement of extensive  works of modernization of the production facilities and of their machinery / machine-tools/ equipment / test benches / verification devices, etc.

To this it is added that much of the equipment and installations currently owned by the company have an advanced degree of physical and moral wear, requiring them to be replaced with new, cutting-edge  ones.

In order to accomplish these actions, the management of the company identified an investment requirement for 2022 worth approx. 22 million lei, amount that will be affected by the value, unknown at this time, of the investments that must be made in order to ensure the minimum conditions imposed by the two future programs in which the company will be involved: multi-role helicopters and attack helicopters.

For the year 2021 the company management has identified an investment requirement of 15 million lei, financed from its own sources, materialized in:

1)  rehabilitation / modernization works carried out on existing tangible assets:

- relocation of PSI (Fire Fighting Brigade) draw and garage, procedure started in 2018 with completion in 2021,

-    modernization of the Final Painting Workshop, action started in 2019, completed in 2021

-    air conditioning of productive spaces, completed in 2021

-    compensation platform and access strap

-    pipe duct rehabilitation: Galvanization workshop - Neutralization station

-    restoration of the natural gas distribution network

2) Purchases of machinery, production accessories, small equipment, C&M devices, of which the most important are: thread rolling machine, salt spray chamber, hardness tester, height work platform, paint mixer, magnetoscopic control machine, VCD, turbo-engine vibration detector, VIBREX rotor balancing assembly and mechanical assemblies, transport equipment (forklift, electric forklift), etc.

3) purchases of IT products made / launched in 2021:

- the implementation and development of an ERP Enterprise Resource Planning System,

- upgrading of hard and soft components.

The production capacities of IAR SA will undergo upgrades over the next few years through the investments to be made by ensuring the technical and technological conditions necessary both for the good development of productive activities and for the development of productive activities.

The unused assets after the reorganization of activities that occurred over time, which are not relevant to the current and medium term development of the company, are in conservation, and they will be valorized by rental or sale, as per the approvals given by competent management bodies.

 

2.2.      The degree of wear of IAR S.A.'s properties is as follows:

-    the buildings and objectives in which the company currently operates have a wear rate between 30% and 35% depending on the year of their putting into service and on the upgrade works they underwent.

-      Fixed assets, inventory items and technological equipment used have a wear rate of between 25% and 50%, reaching in certain cases a higher level as well;

-       the wear rate is between 30% and 60% on the production buildings and other objectives in the construction category (buildings, roads and platforms) currently in conservation;

-       external networks of heating, water/sewage, have a wear rate between 0% (the water  and gas network) and 25% (the others).

 

 

2.3           Issues of ownership of tangible assets owned by IAR S.A.  - not applicable

 

3.            The corporate governance statement

 

3.1. The statement of compliance with the Corporate Governance Code of BSE

 

The Statement of compliance of IAR SA in 2021 to the provisions of the Code of Corporate Governance of BSE is presented below:

 

 

The provisions of the Code of Corporate Governance

Complies

Does not,

or only partially  complies

Reason of the non-compliance

A1 - All companies must have an internal regulation of the Board which includes terms of reference/responsibilities of the Board and  the key functions of the management of the company, which applies, inter alia, the General Principles from Section A.

x

 

 

A2 - The provisions for managing conflicts of interest shall be included in the Board’s Regulation. However, the Board members must notify the Board on any conflicts of interest that have arisen or may arise and refrain from participating in discussions (including by no show, unless that no show would prevent the formation of the quorum) and from the vote for adopting a decision on the matter which is the reason of the conflict of interest.

x

 

 

A3 - The Board of Directors or the Supervisory Board must be composed of at least five members.

x

 

 

A4 - The majority of the Board of Directors' members must have no executive function. At least one member of the Board of Directors or of the Supervisory Board must be independent in the case of companies in the Standard Category. For the companies in the Premium Category, no less than two non-executive members of the Board of Directors or of the Supervisory Board must be independent. Each independent member of the Board of Directors or of the Supervisory Board, as appropriate, must submit a declaration at the time of his nomination for election or re-election and when there is any change in his status, indicating the elements on which it is considered that it is independent in terms of its character and judgment and based on the following criteria:

A.4.1. he/she is not a General Manager/chief executive of the company or of a company controlled by it and has not held such a function in the last five (5) years;

A.4.2. he/she is not an employee of the company or of a company controlled by it and has not held such a position in the last five (5) years;

A.4.3. he/she does not receive and did not receive additional remuneration or other benefits from the company or companies controlled by it, in addition to those appertaining to a non-executive manager;

A.4.4. he/she is or was not an employee or has or had during the previous year a contractual relationship with a significant shareholder of the company, a shareholder who controls more than 10% of the voting rights, or with a company controlled by him/her;

x

 

 

A.4.5. he/she does not have and did not have in the previous year a business or a professional relationship with the company or a company controlled by it, either directly or as a customer, partner, shareholder, member of the Board/Manager, general manager/chief executive or employee of a company if, by its significant character, this relationship may affect its objectivity;

A.4.6. he/she is not and has not been in the last three years the internal or external auditor or associate partner or employee of the current external financial auditor or of the internal auditor of the company or of a company controlled by him/her;

A.4.7. he/she is not a general manager/chief executive of another company where another general manager/chief executive of the company is a non-executive manager;

A.4.8. he/she hasn't been the company's non-executive manager for more than twelve years;

A.4.9. he/she does not have family connections with a person in the cases referred to in paragraphs A.4.1. and A.4.4.

 

 

A 5 - Other commitments and permanent professional obligations relating to a member of the Board, including executive and non-executive positions in the Board of some companies and non-profit institutions, must be disclosed to shareholders and potential investors before his/her nomination and during his/her mandate.

x

 

 

A 6 Any member of the Board must provide information on any relation to a shareholder who holds directly or indirectly shares representing more than 5% of all voting rights. This obligation extends to any relationship which may affect the member's position on issues decided by Board.

x

 

 

A 7 - The company must appoint a secretary of the Board responsible for supporting the work of the Board.

x

 

 

A 8 - The corporate governance statement will inform you if there was an evaluation of the Board under the President or the nomination committee and, if so, it will summarize the key measures and changes resulting from it. The company must have a policy / guide on the assessment of the Board including the purpose, criteria and frequency of the evaluation process.

x

 

 

A 9 - The corporate governance statement must contain information regarding the number of Board meetings and committees over the past year, the participation of managers (in person and in absentia) and a report of the Board and committees on their activities.

x

A 10 - The corporate governance statement must include information on the exact number of independent members of the Board of Directors or of the Supervisory Board.

x

A 11 - The Premium Category companies Board should establish a nomination committee consisting of non-executive members, who will lead the nominations procedure of new members of the Board and make recommendations to the Board. Most members of the nomination committee must be independent.

x

Not applicable.

B 1 - The Board must establish an Audit Committee in which at least one member must be an independent non-executive manager. Most members, including the chairman, must have shown to have adequate qualifications relevant to the functions and responsibilities of the committee. At least one member of the Audit Committee must have accounting or auditing experience proven and appropriate. For companies in the Premium Category, the Audit Committee must be composed of at least three members and the majority of the Audit Committee members must be independent.

x

 

 

B 2 - The chairman of the Audit Committee must be an independent non-executive member.

x

 

 

B 3 - Among its responsibilities, the Audit Committee must conduct an annual evaluation of the internal control system.

x

 

 

B 4 - The assessment must consider the effectiveness and scope of the internal audit function, the adequacy of the reports on the risk and internal control management submitted by the Audit Committee of the Board, the timeliness and effectiveness by which the executive management resolves the deficiencies or weaknesses identified during the domestic inspection and presentation of relevant reports to the Board.

x

 

 

B 5 - The Audit Committee must assess conflicts of interest in connection with the transactions of the company and its subsidiaries with the related parties.

x

 

 

B 6 - The Audit Committee must assess the effectiveness of the internal control and of the risk management system.

x

 

 

B 7 - The Audit Committee must monitor the application of legal standards and generally accepted internal audit standards. The Audit Committee must receive and assess reports of the internal audit team.

x

 

 

B 8 - Whenever the Code mentions reports or analyzes initiated by the Audit Committee, these must be followed by periodic reports (at least annually) or adhoc that must be submitted later to the Board

x

 

 

B 9 - No shareholder may be given preferential treatment in relation to other shareholders and their affiliates.

x

B 10 - The Board must adopt a policy to ensure that any transaction of the company with any of the companies with which it has close relations whose value is equal to or greater than 5% of the net assets of the company (according to the latest financial report) is approved by the Board following a binding opinion of the audit committee of the Board and disclosed correctly to shareholders and potential investors, to the extent that these transactions fall within the category of events which are subject to reporting requirements.

x

B 11 - Internal audits must be conducted by a separate structural division (internal auditing) of the company or by hiring an independent third party entity.

x

 

 

B 12 - In order to ensure the fulfillment of the main functions of the internal audit department, it should report functionally to the Board through the audit committee. For administrative purposes and within the obligations of the management to monitor and reduce risks, it must report directly to the general manager.

x

 

 

C 1 - The company must publish on its website the remuneration policy and include a statement in the annual report on the implementation of the remuneration policy during the annual period under analysis. The remuneration policy must be formulated so as to allow shareholders to understand the principles and arguments underlying the remuneration of the Board, the General Manager and the Executive Board in the dualistic system. It should describe the running of the process and the decision making process regarding remuneration, detailing components of the remuneration of the executive management (such as salary, annual bonus, long-term incentives linked to shareholder value, benefits in kind, pension and others) and describe purpose, principles and assumptions underlying each component (including the general performance criteria related to all forms of variable remuneration). In addition, the remuneration policy should specify the length of the Executive Manager's contract, the period of notice stipulated in the contract, and any compensation for unjust dismissal.

The report on remuneration must present the implementation of the remuneration policy for the individuals identified in the remuneration policy during the annual period under analysis. Any significant change occurred in the remuneration policy must be timely published on the website of the company.

x

 

 

D 1 - The company must set up an Investor Relations

service - indicating to the public  the individual / individuals in charge or the organization unit. In addition to the information required by the law, the company must include on its website a section dedicated to Investor Relations, both in Romanian and in English, with all relevant information of interest to investors, including:

D 1.1 - The main corporate regulations: the constitutive act, the procedures for shareholders assemblies;

D 1.2 - The professional resumes of the company's management members, other professional commitments of the Board members, including executive and non-executive positions in the boards of directors of companies or non-profit institutions;

D 1.3 - The current reports and periodic reports (quarterly, half-yearly and yearly) - at least those specified in paragraph D.8 - including current reports with detailed information on non-compliance with this Code;

x

x

x

x

 

 

D 1.4 - Information on shareholders assemblies: the agenda and the information materials that support the nominations for election to the Board, together with their professional resumes; the shareholders questions about items on the agenda and responses of the company, including decisions taken;

D 1.5 - Information on corporate events such as payment of dividends and other distributions to shareholders, or other events that lead to the acquisition or the limitation of rights of a shareholder, including the deadlines and principles for such operations. The information will be published within a period which allows investors to take investment decisions;

D 1.6 -  The name and contact details of the person who can provide, upon request, relevant information;

D 1.7 - The company presentation (eg. the presentations for investors, the quarterly results presentations etc.), the financial statements (quarterly, half-yearly, yearly), audit reports and annual reports.

x

x

x

x

D 2 - The company will have an annual dividend distribution policy or other benefits for shareholders, proposed by the General Manager or by the Executive Board and adopted by the Board, as a set of guidelines that the company intends to follow on the distribution of net profits. The annual dividend distribution policy to shareholders will be published on the website of the company.

x

 

 

D 3 - The company will adopt a policy regarding forecasts, whether they are made public or not. The forecasts refer to quantified findings studies aimed at determining the overall impact of a number of factors relating to a future period (so called hypotheses): by its nature, this project has a high level of uncertainty, actual results may differ significantly from forecasts initially presented. The policy on expectations will determine the frequency and content of the period covered by the forecast. If published, the forecasts can only be included in the annual, half-yearly or quarterly reports. The policy on forecasts will be published on the website of the company.

x

 

 

D 4 - The general assemblies of shareholders' rules should not limit the participation of shareholders in general meetings and the exercise of their rights. The changes in the rules come into force at the earliest, starting with the next GSM.

x

D 5 - The external auditors will attend the general meeting of shareholders when their reports are presented in such meetings.

x

D 6 - The board will present to the annual general meeting of shareholders a brief assessment of internal control systems and management of significant risks and opinions on issues subject to the decision of the general meeting.

x

D 7 - Any specialist, consultant, expert or financial analyst may attend the shareholders' meeting based on a prior invitation from the Board. Accredited journalists may also participate in the general meeting of shareholders, unless the Chairman of the Board shall decide the contrary.

x

 

 

D 8 - The quarterly and half-yearly financial reports will include information both in Romanian and in English on the key factors that influence changes in the level of sales, the operational profit, the net profit and other financial indicators relevant both from one quarter to another, and from a year to another.

x

 

 

D9 - A company will organize at least two meetings/conference calls with analysts and investors every year. The information presented on these occasions will be published in the investor relations section on the website of the company at the time of meetings/conference calls.

 

x

 

 

D 10 - If a company supports various forms of artistic and cultural expression, sporting, educational or scientific activities and considers their impact on the innovative nature and competitiveness of the company are part of the mission and its development strategy, it will publish the policy on its work in this area.

 

 

Not applicable

 

3.2. Information on the membership, responsibilities and activities of the Board and of the committees

 

3.2.1. The Board of Directors of IAR S.A. consists of 5 members.

a.           Membership, qualifications and experience

Crt.

no.

Name and Surname

Position in the IAR SA Company

Qualifica

tion

The period

of the

current

mandate

1

Dragoș Florin DAVID

Chairman of the Board

engineer

18.02.2020-22.06.2021

2.

Iuliana MUȘAT

Chairwoman of the Board

engineer +

economist

23.06.2021-23.10.2021

3.

Claudia BENCHESCU

Chairwoman of the Board

economist

24.10.2021-

24.02.2022

4. 

Laurian ANASTASOF

Administrator

degree in military sciences

19.06.2020-

22.06.2021

5. 

Ruxandra-Rodica ANGHEL

Administrator

engineer

17.12.2019-

22.06.2021

6.

Mihai Aurel DONȚU

Administrator

economist

18.02.2020-

22.06.2021

and

24.10.2021-

24.02.2022

7.

Cristian Alin BACIU

Administrator

degree in political and administrative sciences

18.02.2020-

22.06.2021

8.

Elena CĂLIN

Administrator

economist

23.06.2021-23.10.2021

9.

Octavian-Thor PLETER

Administrator

engineer

23.06.2021-23.10.2021

10.

Andreea MLADIN

Administrator

economist

23.06.2021-23.10.2021

11.

Alexandru ROȘU

Administrator

lawyer

23.06.2021-23.10.2021

12.

Horațiu Cătălin BARBU

Administrator

engineer

24.10.2021-24.02.2022

13.

Iulia-Gabriela TĂNASE

Administrator

engineer

24.10.2021-24.02.2022

14.

Liviu COCOȘ

Administrator

economist

24.10.2021-24.02.2022

 

None of the above nominees: has any agreement, understanding or connection with others, under which he/she has been appointed as manager of IAR S.A.; he/she did not enter into any transaction with IAR S.A.; he/she did not participate in the share capital of IAR S.A..

 

 

b. The professional experience of IAR S.A. Board members

1. Starting with 2010, Mr. Dragoș Florin DAVID, temporary non-executive and independent member of the Board of Directors of IAR SA starting with 18.02.2020, held the following management and administration positions:

PERIOD                                                  COMPANY/ POSITION

02.2020 – 06.2021

IAR SA - Interim Administrator (Chairman of the Board)

06.2013 – present

Brașov Metropolitan Association for Sustainable Development of Public Transport - Vice President

01.2012 – 12.2015

Ținutul Bârsei Local Action Group, Brașov - General Manager

07.2009 – present

Brașov Metropolitan Agency for Sustainable Development - General Director

Mr. Dragoș Florin DAVID has the following professional training:

- long-term studies: Transilvania University Brașov – Faculty of Mechanics, 1990-1995

- short-term studies, including:

o Postgraduate specialization studies:

- Global Piloting of Foreign Trade Enterprises - ESA, 2004-2005

- Pollution, Environmental Protection and Management, Transylvania University, 2006-2007

o course: Diplomacy and International Relations, Romanian Diplomatic Institute, 2016

o course Environmental Auditor - SC Management Consulting SRL, 2006

o course Public procurement expert, Institute for Human Resource Development

- experience: 23 years experience in management and / or administration positions

2. Starting with 1998, Ms. Iuliana MUȘAT, temporary non-executive and independent member of the Board of Directors of IAR SA starting with 23.06.2021, held the following management and / or administration functions:

PERIOD                                                   COMPANY/ POSITION

06.2021 – 10.2021

IAR SA - Interim Administrator (Chairman of the Board)

09.1998 – 04.2014

Reiffeisen Capital and Investment SA - Director and Chief Financial Officer

05.2014 – present

Reiffeisen Bank - Senior Director Investment Banking

04.2020 – present

NOROFERT S.A. - Administrator

Ms. Iuliana MUȘAT has the following professional certifications / professional trainings:

- long-term studies:

o Bucharest Academy of Economic Studies, Faculty of Finance, Banking and Stock Exchanges - 1992-1997

o Polytechnic University - Faculty of Aircraft - 1986-1991

o FCCA - Member of the ACCA Professional Association

 

3. Starting with 2013, Ms. Claudia BENCHESCU, temporary non-executive member of the Board of Directors of IAR SA starting with 24.10.2021, held the following management and / or administration functions:

PERIOD                                                   COMPANY/ POSITION

10.2021-02.2022

IAR SA - Interim Administrator (Chairman of the Board)

08.2013 – 11.2014

ASF - Head of Protocol Service

11.2016 – 11.2017

Institute of Popular Studies - Director

11.2020 – present

MoI - Undersecretary of State

Ms. Claudia BENCHESCU has the following professional certifications / professional trainings:

- long-term studies:

o Bucharest Academy of Economic Studies, Faculty of General Economics - 2005-2008 (license)

o Bucharest Academy of Economic Studies, Faculty of Marketing - 2008-2010 (Master of Marketing, Management)

o SNSPA Bucharest - 2018-present (master's degree in Government and Society)

- various short-term studies / trainings / certifications

 

4. Throughout his career, General Laurian ANASTASOF, interim member of the Board of Directors of IAR SA since 19.06.2020, has held the following management and administration positions:

PERIOD                                                   COMPANY/ POSITION

06.2020 – 06.2021

IAR SA - Provisional member of the Board of Directors

09.2020 – present

IAR SA - General Manager

10.2017 – 06.2020

Ministry of National Defense - Military Adviser to the Minister of National Defense

12.2013 – 10.2017

MoD - Chief of Staff of the Air Force

03.2009 – 12.2013

MoD - Commander of the 71st Air Base, Câmpia Turzii

06.2007 – 03.2009

MoD - 952 Squadron Commander, 95th Air Base, Bacău

06.2004 – 05.2006

MoD - Squadron Commander 205 Aviation School, 95th Air Base, Bacău

General Laurian ANASTASOF has the following training and professional experience:

- long-term studies:

- The Academy of Advanced Military Studies, Faculty of Command and Staff, Department of Aviation and Air Defense - Bachelor of Military Sciences, class of 2004

- Air War College, Air University, Maxwell, Alabama – Masters Degree, 2007 graduation

- short-term studies:

o Air Safety Course - French Institute of Air Safety, Paris, 1998

o Squadron Officer Training, Air University, Maxwell, Alabama - USA - 1998

o Course in Military Science, Geopolitics and Geostrategy, NATO and EU Policies and Strategies - National Defense College - 2013

o Course on "Security and good governance" - National Defense College - 2015

- extensive experience in leading very large organizations, with significant budgets and complex tasks of continuous modernization of the activity, expert in change management, trained in the operationalization of structures, for 15 years. Experience in the activity of international bodies, acquired in the activity of international representation of the air force and the defense staff at NATO and EU, for over 5 years, very good practical experience as a project manager and member of program management teams development of new products or modernization/upgrade of aeronautical infrastructure, technology and equipment.

 

 

5. Starting with 2011, Ms. Ruxandra-Rodica ANGHEl, temporary non-executive member of the Board of Directors of IAR SA starting with 09.12.2017, held the following management positions:

PERIOD                                                   COMPANY/ POSITION

12.2017 – 06.2021

IAR SA - Provisional non-executive member of the Board of

Directors

2013 – present

Ministry of Economy - Director of the Defense Industry

Department

2011 - 2012

SC Vel Service SA Bucharest - Technical Director

 

Ms. Ruxandra-Rodica Anghel has the following training and professional experience:

-     long-term studies: graduate of the Polytechnics Institute Bucharest / Faculty of Metalurgy – licence 1988

-     short-term studies:

o  post-graduate course in public institutions management, Academy of Economy Studies, Bucharest 2007 – 2008

o  post-graduate course in sustainable professional training and development in the field of critical infrastructure protection management, Academy of Land Forces – Nicolae Bălcescu – Sibiu, 2007

o  numerous short-term studies in the field of management and communication

-    experience: as of 1998 Ms. Rodica Ruxandra Anghel has held various top-management positions.

 

6. Starting with 2010, Mr. Mihai Aurel DONTU, temporary non-executive and independent member of the Board of Directors of IAR SA starting with 18.02.2020, held the following management and administration functions:

PERIOD                                                   COMPANY/ POSITION

02.2020-06.2021 and

10.2021-02.2022

IAR SA - Provisional non-executive member of the Board of

Directors

2016 – present

SC DONAD TURISM SRL –General Director

Mr. Mihai Aurel DONTU has the following training and professional experience:

- long-term studies: Academy of Economic Studies, Faculty of Accounting Management - period 1992 - 1996

- short-term studies:

  • In-depth studies: Local Public Administration in the European Integration Process, Lucian Blaga University of Sibiu - 2006-2007

- experience: over 20 years experience in administrative activities (board member and representative in the GMS of some companies)

 

7. Starting with 2010, Mr. Cristian Alin BACIU, temporary non-executive and independent member of the Board of Direcyors of IAR SA starting with 18.02.2020, held the following management and administration functions:

PERIOD                                                   COMPANY/ POSITION

02.2020-06.2021

IAR SA - Provisional non-executive member of the Board of Directors

05.2012 – 07.2014

Muscopolitan Academic Society Foundation - Director of Strategies

Mr. Cristian Alin BACIU has the following training and professional experience:

- long-term studies:

  • Babes-Bolyai University, Cluj Napoca, Faculty of European Studies - period 1995 - 1999

- short-term studies:

  • Postgraduate studies - National School of Political and Administrative Sciences, Bucharest

 

8. Starting with the year 2002, Ms. Elena CĂLIN, temporary non-executive and independent member of the Board of Directors of IAR SA starting with 23.06.2021, held the following management and administration functions:

PERIOD                                                   COMPANY/ POSITION

06.2021-10.2021

The company IAR SA - Provisional non-executive member of the Board of Directors

05.2002 - present

Costumer Focus Romania, representative of Uplifting Service Singapore - Administrator / Executive Director, Service Culture Expert / Master Trainer

1997 - 1998

Lemcor Craiova - Zonal Sales Director

Ms. Elena CĂLIN has the following professional certifications / professional trainings:

- long-term studies:

  • University of Craiova, Faculty of Economics - 1991-1996

  • Academy of Economic Studies - Master in Business Consulting - 2000-2002

- short-term studies: a series of training / specialization programs, including the following:

  • Specialization course in self-assessment and personal development tools - LIFO International Timisoara, 09.2003-02.2004

  • Course on Transforming Organizational Culture - Advanced Tools - Human Synergetics International - 09.2005-07.2006

  • Postgraduate Course in Creative Leadership - Erudio Romania - 03.2007-09.2007

  • Coach practitioner - Coacing Institute, Romania - 09.2007-03.2009

  • The Metasysteme Coaching, Alain Cardon - 07.2010-03.2016

  • PwC Academy - Six SigmaWhite Belt lean certification - 05.2021

 

9. Mr. Octavian-Thor PLETER, provisional non-executive and independent member of the Board of Directors of IAR SA starting with 28.07.2021, held the following management and administration functions:

PERIOD                                                   COMPANY/ POSITION

07.2021 – 10.2021

The company IAR SA - Provisional non-executive member of the Board of Directors

1993 - present

IDM Kennedy Group Co. SRL - General Manager

2012 - 2016

Polytechnic University of Bucharest - Vice Dean

2016 - present

Polytechnic University of Bucharest - Dean

Mr. Octavian-Thor PLETER has the following professional certifications / training:

- long-term studies:

  • Bucharest Polytechnic Institute, Faculty of Aircraft, class of 1986

  • University of Manchester, UK, Master of Business Administration - 1997-2002

  • Polytechnic University of Bucharest - PhD in aerospace engineering - 1992-2005

  • Bucharest Academy of Economic Sciences - PhD in economics - period 2002-2008

- managerial skills:

  • 27 years of experience as general manager of a company (IDM Kennedy) that has grown from scratch and currently has about 250 employees and a turnover of about 30 million lei.

  • 10 years of experience as rector of a private university (Romanian-British University of Bucharest)

  • An experience of 4 years as vice dean of the Faculty of Aerospace Engineering

  • years experience as dean of the Faculty of Aerospace Engineering.

Also, Mr. Octavian-Thor PLETER

- has received countless awards and distinctions

- is the author of a significant number of books, publications, articles

- holds three industrial patents

- is a member of prestigious professional associations

- has gone through countless specialization and qualification programs

 

10. Starting with 2011, Ms. Andreea MLADIN, non-executive and independent temporary member of the Board of Directors of IAR SA starting with 23.06.2021, held the following management and / or administration functions:

PERIOD                                                   COMPANY/ POSITION

06.2021 – 10.2021

The company IAR SA - Provisional non-executive member of the Board of Directors

01.2011 – 09.2012

Capital Partners Romania (now BT Capital Partners) - M&A Director / Senior Analyst

Ms. Andreea MLADIN has the following professional certifications / training:

- long-term studies: Bucharest Academy of Economic Studies, Faculty of Finance, Banking and Stock Exchanges - 2003-2007

- short-term studies / trainings / certifications:

  • Chartered Financial Analyst (CFA) certified since August 2016

  • Challenger - training program held at Engie University, France, 2017

  • Understanding energy markets - course held at Engie University Brussels, Belgium, 2015

  • Financial Model of spreadsheets - a course run by Training the Street in Milan, Italy, 2008

 

11. Starting with 2009, Mr. Alexandru ROȘU, temporary non-executive and independent member of the Board of Directors of IAR SA starting with 23.06.2021, held the following management and administration functions:

PERIOD                                                   COMPANY/ POSITION

06.2021 – 10.2021

The company IAR SA - Provisional non-executive member of the Board of Directors

01.2009 – present

Prunaru & Asociații Civil Law Firm - Associate Lawyer

06.2017 - present

Romanian National Union of Insolvency Practitioners - member of the Discipline Commission

03.2019 - present

Romanian National Bar Association - Member of the Brașov Bar

Council

Mr. Alexandru ROȘU has the following professional certifications / professional trainings:

- long-term studies:

  • Transilvania University, Faculty of Law, undergraduate studies - period 2001 - 2005

  • Transilvania University, Faculty of Law, Master in Business Criminal Law - period 2005 - 2007

 

12. Starting with 2006, Mr. Horațiu Cătălin BARBU, provisional non-executive and independent member of the Board of Directors of IAR SA starting with 24.10.2021, held the following management and administration functions:

PERIOD                                                   COMPANY/ POSITION

10.2021 – 02.2022

The company IAR SA - Provisional non-executive member of the Board of Directors

2006 - 2014

MoD - Head of the Resource and Information Flow Management Service

Mr. Horațiu Cătălin BARBU has the following professional certifications / professional trainings:

- long-term studies:

  • Polytechnic University of Bucharest, Faculty of Electrical Engineering - 1996-1998 - bachelor's degree

  • Military School of Active Artillery and Anti-Aircraft Missile Officers Leontin SĂLĂJAN Brașov - short-term university studies 1984-1987

- various short-term studies / trainings / certifications

 

13. Starting with 2006, Ms. Iulia Gabriela TĂNASE, temporary non-executive and independent member of the Board of Directors of IAR SA starting with 24.10.2021, held the following management and / or administration functions:

PERIOD                                                   COMPANY/ POSITION

10.2021 – 02.2022

The company IAR SA - Provisional non-executive member of the Board of Directors

02.2006 – 09.2007

SC DAMAI PROD & CONS LTD SRL - Executive Director

11.2011-06.2012

SC SERVICII ELECTRONICE DE ACHIZITII PRIVATE SRL - GENERAL MANAGER

07-2021 – present

MEAT - EXERCISE OF DUTIES AT THE DEPUTY DIRECTOR

Ms. Iulia Gabriela TĂNASE has the following professional certifications / professional trainings:

- long-term studies:

o Polytechnic University of Bucharest, Faculty of Mechanical Engineering - 1997-2003 - degree in Mechatronics

o Polytechnic University of Bucharest, Faculty of Mechanical Engineering - 2020-present - Master in Management Communication

- various short-term studies / trainings / certifications

 

14. Starting with 2017, Mr. Liviu COCOȘ, temporary non-executive and independent member of the Board of Diectors of IAR SA starting with 24.10.2021, held the following management and administration functions:

PERIOD                                                   COMPANY/ POSITION

10.2021 – 02.2022

IAR SA – Non executive provisional member of the Board of Directors

10.2017 – 01.2021

SC LACOLI PRODIMPEX SRL – MANAGER IN TOURISM

10.2019 - present

SC OVIVET DISTRIBUTIE SRL – SALES MANAGER

10.2020 - present

SC CL SOUND CONSTRUCT SRL – DIRECTOR

12.2020 – 07.2021

S. CARFIL SA – SPECIAL ADMINISTRATOR

 

Mr. Liviu COCOȘ has the following professional certifications / professional trainings:

- long-term studies:

o   Bioterra University of Bucharest, Faculty of Agrotourism Engineering and Management - 1993-1998

o   Bioterra University Bucharest - 2005-2007 Master in Management and Legislation

- various short-term studies / trainings / certifications

 

 

3.2.4. The activity of the Board of Directors and advisory committees within the Board

The activity carried out in 2019 by both the Board of Directors of IAR SA and by its advisory committees, is summarized in the following table:

   No. of meetings

             2018

THE BOARD OF DIRECTORS

THE AUDIT COMMITTEE

THE NOMINATION AND REMUNERATION COMMITTEE

8

3

4

 

When, for objective reasons, some of the Board members of IAR SA could not be present at one or more meetings of the Board, they were represented, by mandate, by the other Board members of the company.

The secretary of the Board of Directors of the Company is Ms. Aurelia SUMEDREA. She is also the secretary of the two advisory committees within the Board.

In 2021, the Board of Directors approached in its meetings various topics of interest to the company, such as:

-     approval of the yearly investment plan for 2021 – February 2021;

-     endorsement of the IEB 2021 – February 2021;

-    the  summarizing information on the work carried out by the company between the Board meetings - on the date of each meeting;

-     the analysis and approval of financial statements: during April and November for quarterly statements, in July for the half-yearly statements and in March for the annual statements for the previous financial year;

-   the development of the periodic (quarterly/half-yearly/annual) reports - together with the approval of financial statements for the respective periods;

-     approval of the extension of the mandate contract between the company and its general manager - in January, March July and September 2021;

-     the approval of the 2021 Collective Labor Contract – in June 2021;

-    the analysis of the general manager fulfillment of criteria and performance targets approved for 2020 – May 2021,  – after the approval of the 2020 financial statements;

-     the approval of the key performance indicators related to the current financial year- in March 2021, after the approval of the IEB 2021;

-     approval of the participation of employees in the profit registered at the end of 2020 - in November 2021;

-   any other analysis in the limits of the Board of Directors’ prerogatives - in the moment of occurrence of such situations;

-     the convening of the GSM for issues falling within its competence.

As provided in the Internal Regulations of the Board of Directors of IAR SA, under the leadership of its Chairman and in accordance with the best practices, the Board is considering conducting an annual self-evaluation of its performance, its committees and its cooperation with the managers, making, based on the evaluation results, the action plan necessary for the improvement of the board performances.

According to the principles taken into account:

-   the Board's assessment took into account the balance between skills, experience, independence and knowledge of the Board, its diversity, the way the Board works as a whole and other factors relevant to its effectiveness;

-   the evaluation of the board performances was realized making individual and group interviews;

-   the assessment process was focused primarily on the achievement of three objectives:

         a)  the assessment of the way in which the Board and its committees have operated during 2020;

         b)  the preparation and discussion of important issues in the Company's activity;

c) the presence of the management in the Board meetings and relevant advisory committees and their constructive involvement in discussions and decision-making.

The purpose of Board evaluation in 2020 was to show whether each member continues to contribute effectively and to demonstrate commitment to the role assumed (including allocation of time for Board meetings and committees, as well as any other duties).

Through the activity that took place during 2021, the Audit Committee has sought to assist the Board in carrying out its duties mainly related to financial reporting, internal control and risk management.

The activities of this committee during 2021 focused on:

-     the monitoring of the external auditor's independence, objectivity and effectiveness of the audit process;

-   the monitoring and reviewing of the appropriateness and effectiveness of the internal audit function and internal financial controls in context of the entire risk management system of the Company;

-     the monitoring of transactions between related parties (noting the absence of such transactions);

-     the identification of persons affiliated with IAR SA (noting that there are no other individuals affiliated to IAR);

-   the analysis of reports prepared by the internal auditor and the commission responsible for risk management at company level;

-     the monitoring of the integrity of financial statements of the Company;

-     the development of policies for detecting and preventing fraud and bribery;

By the activity that took place during 2021, the Nomination and the Remuneration Committees provided assistance to the Board of Directors in the following matter:

-    the analysis of the way in which, in 2020, the criteria and performance targets have been met in relation to the mandate contract concluded with the General Manager of the Company

-     the establishment, for the current year, of the key performance indicators.

-     extension of the mandate contract of the general manager of the company

The Nomination and the Remuneration Committees had an important role in monitoring the executive management of IAR SA during 2021, one of the criteria under which the evaluation of the way the General Manager of IAR SA provides the executive management of the company is the fulfillment of criteria and performance targets set out for 2020.

It must be said that the Nomination and the Remuneration Committee members have conducted activities on remuneration in the context in which IAR SA, with majority state ownership, has been subjected to relevant legal regulations applicable to budgetary entities majority state owned entities.

The principles on remuneration of the Board and of the General Manager of IAR SA, which were established by applying the provisions of GO no. 26/2013 and GEO 109/2011, subject to the GSM resolution no. 05/29.04.2021.

Complying to the principles on remuneration of the Board of Directors and of the General Manager of IAR SA, in 2021:

-    the non-executive members of the Board of Directors of IAR SA  were granted a monthly gross indemnity established in accordance with the OGSM Resolution no. 02 / 30.01.2018, by indexing by 20% ​​of the value of the allowance approved by GMS Resolution no. 11 / 28.11.2017, according to the provisions of art. 18 of GEO 90/2017, in order to comply with the new mandatory social contributions due under Law no. 227/2015, as subsequently amended and supplemented, as amended by Government Emergency Ordinance no. 79/2017.

-    the members of the Advisory Committees within the Board shall not be remunerated in addition to their work in the respective committees

-    the upper limit of the fixed remuneration due to the General Director of IAR SA established by the OGSM Resolution no 01/30.01.2018 is the value corresponding to 6 times the average gross monthly salaries for the last 12 months prior to his appointment, communicated by the National Institute of Statistics for the Machine Construction Industry – Aircraft and Spaceships Manufacturing (corresponding to the main activity object of IAR SA)

-   the upper limit of the annual gross variable remuneration component that may be granted to the General Manager of IAR SA, established by the OGSM Resolution no. 06 / 27.04.2018, is of 65,000 euro, the actual value of the annual variable component being determined by the degree of accomplishment of the key performance indicators set out annually, calculated after approval of the annual financial statements

-    special pension rights and/or benefits are not provided.

 

The principles of the remuneration policy is posted on the website of the company. 

3.3. Information on risk management and internal control

 

IAR SA has implemented an effective framework for risk identifying, monitoring and management.

The risk management activity, which includes all processes concerning identifying, evaluating and assessing risks, establishing responsibilities, taking measures to mitigate or to anticipate them, periodic reviewing and monitoring of progress, is regulated procedurally in the Company in order to provide a method by which IAR's risk management becomes operational, so it can be streamlined and strengthened.

During the year 2021, by implementing the risk management system, the executive management of the company:

-    identified key risks, by assessing and monitoring these risks in terms of potential impact and the probability of their materialization;

-    monitored the activity of the commission responsible for risk management at company level;

-    determined key risk indicators for monitoring the performance of the company in relation to the types of risks (eg., operational risk, human resources risk, legal risk, etc.);

-    informed the Board of Directors, through the Auditors’ Committee on the status of significant risks, including on the risk on the company's shares, in order to manage such risks.

The risk management system implemented in the IAR SA is complemented by an internal control system which during 2021:

-    assured both exercising the internal control (excluding internal audit), as defined under the profile legislation in force and performed the detailed administrative control in all departments and divisions of the company

-   foresaw an appropriate level of policies, procedures and processes to limit risks and the achievement of the company's envisaged objectives for the analyzed year,

-     intended to provide reasonable assurance regarding the achievement of the objectives which fall into the following categories: effectiveness and efficiency of operations; the accuracy of financial reporting; compliance with the applicable laws and regulations.

The internal audit function, legally regulated,  provided in 2021, intended:

-    to reasonably offer, objective and independent assurance both to the administrative management and to the executive management, according to which the organization, the company's policies and procedures are working effectively and as expected,

-   to provide insurances regarding the effective implementation at the company level of the framework of risk management and of internal control system,

-     to independently make decisions on matters of audit,

-   to conduct, independently, activities from an operational perspective compared to other departments within the company and to the executive management of the Company,

-    to develop risk plans, by consulting with:

o   the commission responsible for risk management,

o   the audit committee of the Board of Directors.

-    to elaborate the justifying documents that are supported by the conclusions drawn by it while performing its activity.

 

3.4. Information regarding the shareholders

 

The share capital of IAR S.A. is 47,197,132.5 lei, representing a total of 18,878,853 nominal shares, with a nominal value of 2.5 lei each. Each share gives right to one vote in the general meeting of shareholders.

The record of IAR SA 's shareholders is held, under a service agreement by the Depozitarul Central SA. Company.

In IAR SA a department dedicated to handling all issues related to ownership of the company is organized and operates on: the evolution of the shareholder structure, rights arising from the IAR SA's shares, organizing of the general assemblies of shareholders, the dividend distribution, the relationship with the ASF, the BVB and the Depozitarul Central, any matters of corporate governance, as they are governed by the applicable law on capital market issuers whose securities are traded in the Bucharest Stock Exchange.

On the webpage of the company, www.iar.ro, are posted all the information that might be of interest to shareholders and to potential investors.

The information on the shareholder activity may also be obtained from any of the persons below, who work in this department, daily from 07:15 to 15:15:

1. eng. Aurelia SUMEDREA - tel +40-268-475269, extension 1018

2. ec. Camelia CEAPRAZARU – tel +40-268-475269, extension 1026

 

3.4.1. Markets on which the shares issued by IAR S.A.are traded

The shares issued by IAR S.A. were traded on the Bucharest Stock Exchange, the Equity Sector - Standard Category shares- symbol IARV.

From the analysis made based on public information posted on the BSE website the following evolution of IAR S.A.'s shares trading over 2021 emerges:

The total number of transactions

The total number of traded shares

The total value of  traded shares (lei)

The price variation

(%)

3,679

674,010

8,396,461.20

-6.35%

 

It may be noted that the market value of the IAR's shares, resulting from all the transactions carried out in 2021 had a positive evolution,