ARCO VARA AS - NASDAQ OMX Baltic

27 Prepayments
in thousands of kroons
31.12.2005 31.12.2004
Prepayments received from sales of real estate 29 876 10 604
Prepayments received from long-term service agreements 1 8 051 6 739
Other prepayments 3 434 1 449
Total prepayments 41 361 18 792
1
Long-term service agreements 31.12.2005 31.12.2004
Costs incurred and recognised profits of long-term service agreements 144 268 22 681
Invoices issued -144 276 -17 589
Total adjustment of revenue -8 5 092
incl. increasing revenue (accrued income) – see Note 14 8 043 1 647
incl. decreasing revenue (prepaid income) -8 051 -6 739
28 Short- and long-term provisions
in thousands of kroons
Guarantee
provision 1
F-124
Provision for
profit of the
client 2
Other provisions
related to business 3
Total
provision
Balance at 31.12.2003 176 0 1 111 1 287
Additional provision recorded during the
year
57 0 127 184
Balance at 31.12.2004 233 0 1 238 1 471
Additional provision recorded during the
year
58 351 0 409
Provision used during the year 0 0 -138 -138
Balance at 31.12.2005 291 351 1 100 1 742
incl. long-term provision 0 0 1 100 1 100
1 The guarantee provision related to construction is based on previous years experiences, i.e., the
actual guarantee expenses incurred in 2004 to 2005 and the amount of projects with guarantee periods
as of 31.12.2005. The guarantee provision is established for covering the expenses that are expected to
occur during the guarantee period. The guarantee period is 2 years.
2 According to one construction agreement, the client has a right to receive 80% of the difference
between the contract price and the actual cost of the project under the contract. Due to this clause the
Group has a recorded provision on the profit to be paid to the client based on the stage of completion
of the project. The project will be completed in 2006.
3 With references to various transactions that have taken place before the balance sheet date, the Group
has recorded provisions in the total amount of 1 100 thousand kroons for covering possible expenses
associated with these transactions, that are expected to occur in future periods. In the opinion of the
management the risk related to the specified transactions passes in 4 to 6 years.