Table of Contents 1. Introduction 10 1.1. What is this Report About? 10 1.2. Definitions 11 1.3. Summary Methodology 13 1.4. About Strategic Defence Intelligence 14 2. Executive Summary 15 3. Market Attractiveness and Emerging Opportunities 17 3.1. Current Market Scenario 18 3.1.1. Primary Threat Perception 18 3.1.2. Military Doctrine & Strategy 21 3.1.3. Military Fleet Size 24 3.1.4. Procurement Programs 28 Ongoing Procurement Programs 28 Future Procurement Programs 29 Top Procurement Programs by Value (US$ Million) 2018-2023 30 3.1.5. Social, Political and Economic Environment and Support for Defense Projects 31 3.1.6. Political and Strategic Alliances 32 3.2. Defense Market Size Historical and Forecast 33 3.2.1. Romanian defense expenditure to register a CAGR of 10.15% over the forecast period 33 3.2.2. The country’s modernization efforts, to meet NATO standards, and its participation in peacekeeping missions will support defense expenditure 35 3.3. Analysis of Defense Budget Allocation 36 3.3.1. Romania’s defense expenditure as a percentage of GDP is projected to increase over the forecast period 36 3.3.2. Capital expenditure allocation expected to increase during the forecast period 38 3.3.3. Capital expenditure expected to grow at a CAGR of 12.05% over the forecast period 40 3.3.4. Per capita defense expenditure forecast to grow over the forecast period 42 3.4. Homeland Security Market Size and Forecast 43 3.4.1. Homeland security budget projected to grow steadily during the forecast period 43 3.4.2. Border control measures and cybercrime to drive homeland security budget 45 3.4.3. The nation is at ‘some risk’ of terrorism 46 3.4.4. Romania faces some level of threat from foreign terrorist organizations 47 3.4.5. Romania has a terrorism index score of 0.0 49 3.5. Benchmarking with Key Global Markets 50 3.5.1. Romania’s defense budget to increase at a CAGR of 10.15% during the forecast period 50 3.5.2. Romanian defense expenditure is expected to remain low compared to other leading spenders 52 3.5.3. The country allocates a lower percentage of GDP towards defense as compared to other top defense spenders globally 53 3.6. Market Opportunities: Key Trends and Growth Stimulators 54 3.6.1. Top Defense Market Sectors by Value (US$ Million) - Projections over 2018-2023 54 3.6.2. Land Based C4ISR 55 3.6.3. Military IT-Networking 56 3.6.4. Maritime Surveillance and Detection 57 4. Defense Procurement Market Dynamics 59 4.1. Import Market Dynamics 61 4.1.1. Defense imports registered an increasing trend during 2013-2017 61 4.1.2. Romania sourced most of its arms from Portugal 62 4.1.3. Aircraft and sensors accounted for most of arms imports during 2013-2017 63 4.2. Export Market Dynamics 64 4.2.1. Defense exports are forecast to grow during the forecast period 64 4.2.2. Romania supplies most of its defense equipment to the Netherlands 65 4.2.3. Naval vessels are the most exported defense goods 65 5. Industry Dynamics 66 5.1. Five Forces Analysis 66 5.1.1. Bargaining Power of Supplier: Low to Medium 67 5.1.2. Bargaining Power of Buyer: High 67 5.1.3. Barrier to Entry: Medium 67 5.1.4. Intensity of Rivalry: Medium to High 67 5.1.5. Threat of Substitution: Medium to High 67 6. Market Entry Strategy 68 6.1. Market Regulation 68 6.1.1. Offset policy mandates suppliers invest a minimum of 80% of the contract value into the Romanian economy 68 6.1.2. Romania allows 100% foreign direct investment in the defense sector 69 6.2. Market Entry Route 70 6.2.1. Budgeting Process 70 6.2.2. Procurement Policy and Process 72 6.2.3. Foreign OEMs enter the market through the acquisition of domestic defense companies 73 6.2.4. EDA promotes defense procurements within the EU 74 6.3. Key Challenges 75 6.3.1. Rampant corruption and inadequate legal infrastructure 75 6.3.2. Low defense budget weighs down market prospects 75 7. Competitive Landscape and Strategic Insights 76 7.1. Competitive Landscape Overview 76 7.2. Key Domestic Companies 79 7.2.1. CN Romarm SA: Overview 79 7.2.2. CN Romarm SA: Product Focus 79 7.2.3. CN Romarm SA: Recent Announcements and Strategic Initiatives 81 7.2.4. CN Romarm SA: Alliances 81 7.2.5. CN Romarm SA: Recent Contract Wins 82 7.2.6. S.C. Uzina Mecanica Cugir S.A: Overview 83 7.2.7. S.C. Uzina Mecanica Cugir S.A: Product Focus 83 7.2.8. S.C. Uzina Mecanica Cugir S.A: Recent Announcements and Strategic Initiatives 84 7.2.9. Aerostar S.A.: Overview 85 7.2.10. Aerostar S.A.: Products 85 7.2.11. Aerostar S.A.: Recent Announcements and Strategic Initiatives 85 7.2.12. Aerostar S.A.: Alliances 86 7.2.13. Aerostar S.A.: Recent Contract Wins 86 7.2.14. Aerostar S.A.: Financial Analysis 87 7.2.15. IAR S.A. Brasov: Overview 89 7.2.16. IAR S.A. Brasov: Products and Services 89 7.2.17. IAR S.A. Brasov: Recent Announcements and Strategic Initiatives 89 7.2.18. IAR S.A. Brasov: Recent Contract Wins 90 7.2.19. IAR S.A. Brasov: Financial Analysis 90 7.2.20. Turbomecanica S.A.: Overview 92 7.2.21. Turbomecanica S.A.: Product Focus 92 7.2.22. Turbomecanica S.A.: Recent Announcements and Strategic Initiatives 93 7.2.23. Turbomecanica S.A.: Financial Analysis 93 7.2.24. Electromagnetica S.A.: Overview 95 7.2.25. Electromagnetica S.A.: Product Focus 95 7.2.26. Electromagnetica S.A.: Recent Announcements and Strategic Initiatives 95 7.2.27. Electromagnetica S.A.: Financial Analysis 96 7.2.28. Avioane Craiova S.A.: Overview 98 7.2.29. Avioane Craiova S.A. (SAIC): Product Focus 98 7.2.30. Avioane Craiova S.A: Recent Announcements and Strategic Initiatives 98 7.2.31. Avioane Craiova S.A: Alliances 99 7.2.32. Avioane Craiova S.A: Recent Contract Wins 99 7.2.33. Elprof S.A: Overview 100 7.2.34. Elprof S.A.: Product Focus 100 7.2.35. Elprof S.A.: Recent Announcements and Strategic Initiatives 100 7.2.36. Elprof S.A.: Recent Contract Wins 100 7.3. Domestic Private Companies 101 7.3.1. IOR S.A.: Overview 101 7.3.2. IOR S.A.: Product Focus 101 7.3.3. IOR S.A: Recent Announcements and Strategic Initiatives 102 7.3.4. Simultec S.R.L: Overview 103 7.3.5. Simultec S.R.L: Product Focus 103 7.3.6. Simultec S.R.L: Recent Announcements and Strategic Initiatives 104 7.3.7. Simultec S.R.L: Recent Contract Wins 104 7.4. Foreign Private Companies 105 7.4.1. Lockheed Martin: overview 105 7.4.2. Lockheed Martin: main products and services 105 7.4.3. Lockheed Martin: recent announcements and strategic initiatives 105 7.4.4. Lockheed Martin: alliances 106 7.4.5. Lockheed Martin: recent contract wins 106 7.4.6. Lockheed Martin Corp.: financial analysis 108 7.4.7. General Dynamics European Land Systems (GDELS): Overview 110 7.4.8. General Dynamics European Land Systems (GDELS): Defense Products 110 7.4.9. General Dynamics European Land Systems (GDELS): Recent Announcements and Strategic Initiatives 110 7.4.10. General Dynamics European Land Systems (GDELS): Alliances 111 7.4.11. General Dynamics European Land Systems (GDELS): Recent Contract Wins 111 7.4.12. Iveco: Overview 113 7.4.13. Iveco: Defense Products 113 7.4.14. Iveco: Recent Announcements and Strategic Initiatives 113 7.4.15. Iveco: Alliances 114 7.4.16. Iveco: Recent Contract Wins 114 7.4.17. Intelcan Technosystems, Inc.: Overview 115 7.4.18. Intelcan Technosystems, Inc.: Product Focus 115 7.4.19. Intelcan Technosystems, Inc.: Recent Announcements and Strategic Initiatives 116 7.4.20. Intelcan Technosystems Inc.: Recent Contract Wins 116 7.4.21. Airbus Helicopters Romania: Overview 117 7.4.22. Airbus Helicopters Romania: Products and Services 117 7.4.23. Airbus Helicopters Romania: Recent Announcements and Strategic Initiatives 118 7.4.24. Airbus Helicopters Romania: Recent Contract Wins 118 8. Business Environment and Country Risk 119 8.1. Economic Performance 119 8.1.1. GDP Per Capita 119 8.1.2. GDP, Current Prices 120 8.1.3. Exports of Goods and Services (LCU Bn) 121 8.1.4. Imports of Goods and Services (LCU Bn) 122 8.1.5. Gross National Disposable Income (US$ Bn) 123 8.1.6. Local Currency Unit per US$ 124 8.1.7. Market Capitalization of Listed Companies 125 8.1.8. Market Capitalization of Listed Companies (% of GDP) 126 8.1.9. Government Cash Surplus/Deficit as a Percentage of GDP 127 8.1.10. Goods Exports as a Percentage of GDP 128 8.1.11. Goods Imports as a Percentage of GDP 129 8.1.12. Service Imports as a Percentage of GDP 130 8.1.13. Service Exports as a Percentage of GDP 131 8.1.14. Net Foreign Direct Investment (US$ Bn) 132 8.1.15. Net Foreign Direct Investment as a Percentage of GDP 133 8.1.16. Mining, Manufacturing, Utilities Output 134 9. Appendix 135 9.1. About SDI 135 9.2. Disclaimer 135

List of Tables Table 1: Romanian Army Strength 24 Table 2: Romanian Navy Strength 26 Table 3: Romania Air Force Strength 27 Table 4: Romanian Ongoing Procurement Programs 28 Table 5: Romanian Future Procurement Programs 29 Table 6: Top Romanian Defense Procurement Programs by Value (US$ Million) 2018-2023 30 Table 7: Romanian Defense Expenditure (RON Billion & US$ Billion), 2014-2023 33 Table 8: Romanian GDP Growth vs. Defense Expenditure as a Percentage of GDP Growth, 2014-2023 36 Table 9: Romanian Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 38 Table 10: Romanian Defense Capital Expenditure (RON Billion & US$ Billion), 2014-2023 40 Table 11: Romanian Per Capita Defense Expenditure (US$), 2014-2023 42 Table 12: Romanian Homeland Security Expenditure (RON Billion & US$ Billion), 2014-2023 43 Table 13: Terrorism Index, 2018 47 Table 14: Benchmarking with Key Markets: 2014-2018 vs. 2019-2023 50 Table 15: Top Romanian Defense Market Sectors by Value (US$ Million) - 2018-2023 54 Table 16: Offset Regulations in Romania 69 Table 17: Romanian Budget Formation Timetable: 70 Table 18: Market Entry Strategies by Key Foreign Companies 73 Table 19: Top Defense Suppliers in Romanian Defense Industry - By Value (US$ Million) 2018-2023 76 Table 20: Competitive Landscape of the Romanian Defense Industry 77 Table 21: CN Romarm SA - Product Focus 79 Table 22: CN Romarm SA - Alliances 81 Table 23: CN Romarm SA. - Recent Contract Wins 82 Table 24: S.C. Uzina Mecanica Cugir S.A - Product Focus 83 Table 25: Aerostar S.A - Product Focus 85 Table 26: Aerostar S.A - Alliances 86 Table 27: Aerostar - Recent Contract Wins 86 Table 28: IAR S.A. Brasov - Products and Services 89 Table 29: IAR S.A. Brasov - Recent Contract Wins 90 Table 30: Turbomecanica S.A. - Product Focus 92 Table 31: Electromagnetica S.A. - Product Focus 95 Table 32: Avioane Craiova S.A. - Product Focus 98 Table 33: Avioane Craiova S.A. - Alliances 99 Table 34: Avioane Craiova S.A. - Recent Contract Wins 99 Table 35: Elprof S.A. - Product Focus 100 Table 36: Avioane Craiova S.A. - Recent Contract Wins 100 Table 37: IOR S.A. - Product Focus 101 Table 38: Simultec S.R.L - Product Focus 103 Table 39: Simultec S.R.L - Recent Contract Wins 104 Table 40: Lockheed Martin, Main Products 105 Table 41: Lockheed Martin, Alliances 106 Table 42: Lockheed Martin, Recent Contract Wins 106 Table 43: General Dynamics European Land Systems (GDELS) - Key Products 110 Table 44: General Dynamics European Land Systems (GDELS) - Alliances 111 Table 45: General Dynamics European Land Systems (GDELS) - Recent Contract Wins 111 Table 46: Iveco - Key Products and Services 113 Table 47: Iveco - Alliances 114 Table 48: Iveco - Recent Contract Wins 114 Table 49: Intelcan Technosystems, Inc. - Product Focus 115 Table 50: Intelcan Technosystems, Inc. - Recent Contract Wins 116 Table 51: Airbus Helicopters Romania - Products and Services 117 Table 52: Airbus Helicopters Romania - Recent Contract Wins 118 List of Figures Figure 1: Romanian Defense Expenditure (RON Billion), 2014-2023 34 Figure 2: Romanian Defense Expenditure (US$ Billion), 2014-2023 34 Figure 3: Romanian GDP Growth vs. Defense Expenditure as a Percentage of GDP, 2014-2023 37 Figure 4: Romanian Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 39 Figure 5: Romanian Capital Budget Allocation (RON Billion), 2014-2023 41 Figure 6: Romanian Capital Budget Allocation (US$ Billion), 2014-2023 41 Figure 7: Romanian Per Capita Defense Expenditure (US$), 2014-2023 42 Figure 8: Romanian Homeland Security Expenditure (RON Billion), 2014-2023 44 Figure 9: Romanian Homeland Security Expenditure (US$ Billion), 2014-2023 44 Figure 10: Terrorism Heat Map, 2018 46 Figure 11: Terrorism Index, 2018 49 Figure 12: Benchmarking with the World’s Largest and Top Regional Defense Spenders (US$ Billion), 2018 and 2023 51 Figure 13: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2018 and 2023 52 Figure 14: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2018 53 Figure 15: Land Based C4ISR Market Size (US$ Million), 2018-2023 55 Figure 16: Military IT-Networking Market Size (US$ Million), 2018-2023 56 Figure 17: Maritime Surveillance and Detection Market Size (US$ Million), 2018-2023 58 Figure 18: Romanian Defense Procurements in Terms of Their Supplier Relationships 60 Figure 19: Romanian Defense Import Trend (US$ Million), 2013-2017 61 Figure 20: Romanian Defense Imports by Country (%), 2013-2017 62 Figure 21: Romanian Defense Imports by Category (%), 2013-2017 63 Figure 22: Romanian Defense Exports (US$ Million), 2013-2017 64 Figure 23: Industry Dynamics - Porter’s Five Forces Analysis 66 Figure 24: Aerostar S.A. - Revenue Trend Analysis (RON Million), 2012-2016 87 Figure 25: Aerostar S.A. - Operating Profit Trend Analysis (RON Million), 2012-2016 88 Figure 26: Aerostar S.A. - Net Profit Trend Analysis (RON Million), 2012-2016 88 Figure 27: IAR S.A. Brasov - Revenue Trend Analysis (RON Million), 2012-2016 90 Figure 28: IAR S.A. Brasov - Operating Profit Trend Analysis (RON Million), 2012-2016 91 Figure 29: IAR S.A. Brasov - Net Profit Trend Analysis (RON Million), 2012-2016 91 Figure 30: Turbomecanica S.A. - Revenue Trend Analysis (RON Million), 2012-2016 93 Figure 31: Turbomecanica S.A. - Operating Profit Trend Analysis (RON Million), 2012-2016 94 Figure 32: Turbomecanica S.A. - Net Profit Trend Analysis (RON Million), 2012-2016 94 Figure 33: Electromagnetica SA - Revenue Trend Analysis (RON Million), 2012-2016 96 Figure 34: Electromagnetica S.A. - Operating Profit Trend Analysis (RON Million), 2012-2016 97 Figure 35: Electromagnetica S.A. - Net Profit Trend Analysis (RON Million), 2012-2016 97 Figure 36: Lockheed Martin Corp. - Revenue Trend Analysis (US$ billion), 2013-2017 108 Figure 37: Lockheed Martin Corp. - Operating Profit Trend Analysis (US$ billion), 2013-2017 109 Figure 38: Lockheed Martin Corp. - Net Profit Trend Analysis (US$ billion), 2013-2017 109 Figure 39: Romanian GDP Per Capita, 2015-2025 119 Figure 40: Romanian GDP, Current Prices (US$ Billion), 2015-2025 120 Figure 41: Romanian Export of Goods and Services (LCU Bn), 2005-2014 121 Figure 42: Romanian Imports of Goods and Services (LCU Bn), 2005-2014 122 Figure 43: Gross National Disposable Income (US$ Bn), 2005-2014 123 Figure 44: Local Currency per US$, 2015-2024 124 Figure 45: Romanian Market Capitalization of Listed Companies (US$ Billion), 2005-2012 125 Figure 46: Romanian Market Capitalization of Listed Companies (% of GDP), 2005-2012 126 Figure 47: Romanian Government Cash Surplus/Deficit as a % of GDP, 2005-2012 127 Figure 48: Romanian Goods Exports as a % of GDP, 2005-2014 128 Figure 49: Romanian Goods Imports as a % of GDP, 2005-2014 129 Figure 50: Romanian Service Imports as a % of GDP, 2005-2014 130 Figure 51: Romanian Service Exports as a % of GDP, 2005-2014 131 Figure 52: Romanian Net Foreign Direct Investment (US$ Billion), 2005-2014 132 Figure 53: Romanian Net Foreign Direct Investment as a % of GDP, 2005-2014 133 Figure 54: Romanian Mining, Manufacturing, Utilities Output (US$ Billion), 2005-2014 134

CN Romarm SA S.C. Uzina Mecanica Cugir SA Aerostar SA IAR SA Brasov Turbomecanica SA Electromagnetica SA Avioane Craiova SA Elprof SA IOR SA Simultec SRL Lockheed Martin Corporation (Lockheed Martin) General Dynamics European Land Systems (GDELS) Iveco Intelcan Technosystems, Inc Airbus Helicopters Romania