Investor Presentaiton
1. China
2. USA
15
3. Germany
4. France c
5. Great Britain C
6. Italy
7. Australia
3
2
8. Canada N
9. Finland
2
CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | FINANCIAL PERFORMANCE
2.1 SALES
Due to KONE's business model, the nature of its operations
and its governance structure, KONE has one operating
segment.
Sales by customer
KONE's customer base consists of a large number of
customers in several markets areas with no significant
customer concentration. In 2021 the single biggest customer,
residing in China, generated 1.3% of total revenue.
Sales by business
Jan 1-Dec 31,
MEUR
New equipment
Services
Maintenance
2021 %
5,637.7 54
4,876.4 46
3,450.6 33
1,425.9 14
10,514.1
Jan 1-Dec 31,
2020 %
5,340.2 54
4,598.4 46
3,215.6 32
1,382.8 14
9,938.5
Modernization
Total
Sales by geographical area
MEUR
EMEA)
Americas
Asia-Pacific
Total
Jan 1-Dec 31,
2021 %
4,036.9 38
1,902.9 18
4,574.3 44
10,514.1
Jan 1-Dec 31,
2020
%
3,916.2 39
1,939.5 20
4,082.8 41
9,938.5
EMEA = Europe, Middle East, Africa
Top 10 countries by sales, %
-35
Accounting principles
Revenue recognition
Revenue from contracts with KONE's customers is recognized
at an amount that reflects the consideration to which KONE
expects to be entitled in exchange for delivering promised
goods or services to a customer.
KONE recognizes revenue when or as it satisfies a
performance obligation by transferring control on the promised
goods or services (performance obligation) to a customer.
A performance obligation is a distinct good or service
within a contract that a customer can benefit from on a stand-
alone basis. For KONE's new equipment and modernization
contracts, a performance obligation typically means delivery
and installation of a single unit, i.e. an elevator, an escalator or
other People Flow TM solution. For KONE's maintenance
contracts, maintenance of a single unit is considered as a
distinct performance obligation and for repairs business,
typically a service order is a performance obligation for KONE.
In new equipment and modernization contracts, KONE
transfers the control of a single unit to the customer over time
and, therefore, satisfies the performance obligation and
recognizes revenue over time. The transfer of control is
initiated when KONE completes full delivery of the unit to a
customer site as then the customer has the ability to direct the
use of, and obtain substantially all of the remaining benefits
from, a unit constructed by KONE. Upon this milestone and
onwards up to the project handover, revenue is recognized
under the percentage of completion method using a cost-to-
cost input method as based on KONE's assessment it best
depicts the transfer of control to the customer. Percentage of
completion is defined as the proportion of an individual
performance obligation's cost incurred to date from the total
estimated costs for that particular performance obligation.
The percentage of completion method requires accurate
estimates of future revenues and costs over the full term of
the contracts. These significant estimates form the basis for
the amount of revenue to be recognized and include the
latest updated estimate of total revenue and costs, adjusted
with risks based on historical experience on typical
estimation revisions for similar types of contracts. These
estimates may materially change due to the stage of
completion of the contract, changes in the contract scope,
cost estimates and customer's plans and other factors.
Revenues from the rendering of maintenance services and
repairs are recognized when the services have been
rendered or over the contract term when the work is being
carried out.
For maintenance services the performance obligation is
satisfied over time because the customer simultaneously
receives and consumes the benefits provided as KONE
performs the services.
Most of KONE's revenue is derived from fixed-price
contracts and, therefore, the amount of revenue to be earned
from each contract is determined by reference to those fixed
prices. KONE's customer contracts do not contain any
significant financing components. In new equipment and
modernization contracts payment terms are typically based
on either specific contractual milestones or progress of work
performed. In maintenance services contracts customers
generally pay based on fixed payment schedules.
When customer contracts contain multiple performance
obligations, the transaction price is allocated to each
performance obligation based on the standalone selling
prices. Where these are not directly observable, they are
estimated based on estimated costs plus margin approach.
2
10. Sweden N
33
43
KONE ANNUAL REVIEW 2021View entire presentation