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Investor Presentaiton

CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | NET WORKING CAPITAL The credit quality of advance payments receivable and accounts receivable is evaluated according to KONE's credit policy. According to this policy, the rules for credit quality evaluation are set separately for the new equipment business and the service business. The credit quality is evaluated both on the basis of the aging of the receivables as well as on the basis of individual case by case customer analysis in order to identify customers with a potential higher credit risk due to individual customer specific reasons. The bad debt provision for the accounts receivable is recognized on the basis of this credit quality evaluation using the expected credit loss model. In 2020, KONE modified the calculation parameters for the receivables aging based allowance as well as recorded impairment charges on certain individual cases to reflect the effect of increased risk for credit losses pertaining to COVID- 19. Overall, the disruption to the business arising from COVID-19 has been limited with a significant part of KONE's operations being considered essential and as such, allowed even during lockdowns. According to management assessment, at the end of the reporting period the pandemic no longer poses additional risk to collection of receivables. The amount of bad debt provision recorded to cover doubtful accounts was EUR 284.4 (262.5) million at the end of the financial period. Aging of accounts receivable Aging structure of the accounts receivable after recognition of impairment, MEUR Not past due and less than one month due receivables Past due 1-3 months Past due 3-6 months Past due > 6 months Accounts receivable in the consolidated statement of financial position Dec 31, 2021 1,923.4 278.5 Dec 31, 2020 1,674.5 277.5 133.1 134.8 86.4 91.9 2,421.4 2,178.6 54 KONE ANNUAL REVIEW 2021
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