Model of R&D and inovation in the holding company

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Model of R&D and inovation in the holding company Miroslav Poljak, Ph.D. Member of the Managing Board 9 May 2016

Content Basic data of the KONČAR Holding RDI of a single product RDI of a complex product Case studies

Basic data of the KONČAR Holding 1921 - Founded as ELEKTRA Inc. Zagreb since 1991 - KONČAR ELECTRICAL INDUSTRY Inc. Today: Holding of 18 companies and one affiliated company PRODUCTION PROGRAM Energy power generation, transmission and distribution equipment and plants Transport electrical locomotive, tram and commuter train Industry electrical equipment and systems in industrial plants 4000 employees

Corporate values Own research and development Skilful employees with University degrees Customer individual approach Excellence Tradition Social responsibility

Single products GENERATORS AND MOTORS HIGH VOLTAGE SWITCHGEAR MEDIUM VOLTAGE APPARATUS DISTRIBUTION AND SPECIAL TRANSFORMERS INSTRUMENT TRANSFORMERS ELECTRONICS AND INFORMATICS METAL STRUCTURES SMALL ELECTRICAL MACHINES LOW VOLTAGE SWITCHGEAR & CIRCUIT BREAKERS POWER TRANSFORMERS

Complex products, plants and services POWER PLANT & EL. TRACTION ENGINEERING SWITCHGEAR ELECTRIC VEHICLES ENG. FOR PLANT INSTALLATION & COMMISSIONING RENEWABLE SOURCES

RDI process for a single products Universities Design office Others R&D Institutes

Research & Developement Institutes In-house research and development institute

Key business activities of the Insitute Research and Development Laboratory Testing & Product Certification Specific Products

Research & Developement Applied research: transformers, rotating machines, HV and MV switchgear, power converters, wind turbines, components of rail vehicles, HW/SW, ICT

Laboratory Testing & Product Certification 1 High Voltage Laboratory 2 Laboratory 7 laboratories for Rotating hold Machines 3 EN Laboratory 17025 accreditation for Noise and Vibrations 4 High Power Laboratory 5 Electronics & Electromotive Drives Laboratory 6 EMC and Safety Laboratory 7 Calibration Laboratory 8 Laboratory for Mechanical & Technological Testing 9 Laboratory for Physical & Chemical Testing

Specific products Products which are not in production program of other daughter companies Components for low-volume complex products

Specific products (examples) HW and SW components of embedded control system (safety control platforms) Off-grid power supplies Modular hybrid autonomous power supply integrating: solar energy, wind energy, fuel cell (hydrogen), battery bank, diesel gen-set Applications: telecom, gas, oil, rural areas Monitoring systems

Monitoring systems Transformers Rotating machines Bay/Switch yards

RDI process for a complex products The Management Board of KONČAR has set the following strategic areas of development: Transformer Stations Power Generation Renewables Smart Grids and Communication Technologies Traction Vehicles Information Technologies

Strategic RDI objectives To harmonize strategic RDI projects with objectives of the Holding To accelerate strategic RDI activities by rational use of resources To stimulate RDI of long-term projects and new research areas

Strategic RDI activities - definitions Coordination Leader Company a company appointed by the Management Board of KONČAR for the coordination of RDI within the strategic area Area Coordinator a person appointed by the Management Board of KONČAR for coordination in the strategic area Strategic Development Council advisory body of the Management Board of KONČAR for strategic and longterm development issues

Bylaws and agreements between companies Trade secret rulebook Agreement for managing research and development in KONČAR strategic areas Contract regulating research and development services in strategic area Agreement for mutual cooperation and exchange of business and technical data in strategic area

Launch of strategic RDI projects Management Board Interested company Area Coordinator PROPOSAL for RDI projects Strategic Development Council Decision by participants' MBs* OPINION on project proposal Participants Preliminary consent* Management Board of KONČAR Electrical Industry Inc. *In line with the Company s Article of Association and the Rules of Procedure for the Supervisory Board DECISION BY THE MB Leader company Participants of RDI Project leader (Director)

Project acceptance Participants Project leader (Director) RDI PLAN AND PROGRAM Supervisory Board Management Board of KONČAR Electrical Industry Inc. Participants' MBs Participants' SUPERVISORY BOARDS Decision by MB Acceptance of the RDI project financing plan and program Decision by MB Adoption of the RDI plan and program and consent to agreements with other participants

Funding sources Daughter company s allocated resources for funding own activities (statutory and other reserves, free depreciation funds, from current operations) Daughter company s allocated resources for funding agreed activities with other Holding companies (agreements between two or more companies) Recapitalization by cash by tangible asset by intangible asset Other specific purpose funds (national and EU funds)

Project supervision Project leader (Director) TECHNICAL, COMMERCIAL AND FINANCIAL REPORT Management Board Participants' MBs Project supervision body (Participants & Area Coordinator) Strategic Development Council

Case studies Metal Commuter Digital clad transformer gas traininsulated station switchgear 145 kv

Centre of excellence for transformers Scientific research programs Postgraduate specialist study (at the Faculty of Electrical Engineering and Computing & Faculty of Mechanical Engineering and Naval Architecture) Scientific-Professional Colloquium

Scientific research program Dedicated scientific research projects from the area of power and instrument transformers In cooperation with the academic community Funded by the companies within KONČAR Holding Supported by Croatian and international funds

Postgraduate specialist study Postgraduate international interdisciplinary specialist study in transformers 3 university terms; 60 ECTS credits (European Credit Transfer System); lectures in English Total of 6 courses, 40 hours each Lectures are organized one week per month; 3 months per university term

Scientific professional Colloquium International Colloquium Transformer Research and Asset Management Every 2,5 years Main topics: - Transformer Numerical Modeling - Materials, Components and New Technologies - Transformer Life Management

Contacts KONČAR ELECTRICAL INDUSTRY Inc. Fallerovo šetalište 22, 10000 Zagreb, Croatia phone: +385 1 3655 974 e-mail: info@koncar.hr web: www.koncar.com