ANNUAL INTEGRATED REPORT 2021

ANNUAL INTEGRATED REPORT 2021 | AXTEL = factors. Accounts receivable are entirely reserved when there are specific collection problems; based on past experience. Moreover, collection problems such as bankruptcy or catastrophes are also taken into account. Accounts receivable are analyzed monthly, and the allowance for impairment of accounts receivable is adjusted in profit or loss. Additionally, the Company performs a qualitative evaluation of economic projections, in order to determine the possible impact on probabilities of default and the recovery rate assigned to its customers. Finally, in the evaluation of the derecognition of an account receivable, the Company evaluates whether there is any current expectation of recovery of the asset, before proceeding to execute the corresponding derecognition. During the year ended December 31, 2021, there have been no changes in estimation techniques or assumptions. Axtel conducts an economic evaluation of the efforts necessary to initiate legal proceedings for the recovery of past-due balances. Other than Companies A and B, which are the Company's main customers, the Company has no significant exposure to credit risk involving a single customer or group of customers with similar characteristics. A group of customers is considered to have similar characteristics when they are related parties. The credit risk concentration of companies A and B must not exceed 20% of the gross amount of financial assets at any given moment during the year. The credit risk concentration of any other customer must not exceed 5% of the gross amount of monetary assets at any given moment during the year. Company A accounts for 18%, 7% and 3% of the Company's total accounts receivable as of December 31, 2021, 2020 and 2019, respectively. Additionally, revenues associated to Company A for the years ended December 31, 2021, 2020 and 2019 was 4%, 3% and 2%, respectively. Company B accounts for 5%, 3% and 4% of the Company's total accounts receivable as of December 31, 2021, 2020 and 2019, respectively. Additionally, revenues related to Company B for the years ended December 31, 2021, 2020 and 2019 was 9%, 8% and 8%, respectively. As of December 31, 2021, 2020 and 2019, the allowance for impairment totaled $304,637, $373,335 and $1,208,739 respectively. Axtel considers this allowance to be sufficient to cover for the probable loss of accounts receivable; however, it cannot ensure that it will not need to be increased. Investments The Company's policies for managing cash and temporary cash investments are conservative, which allows for minimizing risk in this type of financial asset, taking into account also that operations are only conducted with financial institutions with high credit ratings. The Company's maximum exposure to credit risk is equivalent to the total carrying amount of its financial assets. Liquidity risk The Company's finance department continuously monitors the cash flows' projections and the Company's liquidity requirements, ensuring 13 143

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