Glossary

Major abbreviations

F#1 -RAS Form #1 (Balance sheet)
F#2 - RAS Form #2 (Income statement)

Business profile highlights

Urban/rural TN
Urban/rural telephone network

Installed capacity (at end of period)
Total capacity of company telephone exchanges.

Switched capacity (at end of period)
Total number of telephone lines switched to company's exchanges.

Digitalization
Ratio of lines switched to digital exchanges to total switched lines.

Financial highlights (based on RAS statements).

All indicators and ratios below are based on RAS figures, and therefore reflect all the inconveniences of Russian Accounting Standards.

Average R/$ rate
Estimated average ruble/US dollar exchange rate (based on daily rates set by the Central Bank of Russia)

R/$ ratio at end of period
R/$ ratio set by the Central Bank of Russia on the last day of period

Sales
F#2, line 010.

EBITDA (Earnings Before Taxation, Depreciation, Amortization)
Equivalent to: Operating profit (loss) + amortization + interest to be paid.

Depreciation and Amortization allowances
F#5 (enclosure to balance sheet), line 640

Other operating income (expenses)
F#2, line 060 - line 070 + line 080 + line 090 - line 100

Earnings before tax (EBT)
F#2, line 140

Net profit
Equivalent to: EBT - profit tax.

F#2, line 190

Cash and marketable securities
F#1, line 250 + line 260

Accounts receivable
F#1, line 230 + line 240

Inventory
F#1, line 210

Other current assets
F#1, line 290 - line 260 - line 250 - line 240 - line 230 - line 210

Fixed assets
F#1, line 190

Accounts payable
F#1, line 620 - line 624 - line 625 - line 626

Taxes, salaries and other charges payable
F#1, line 624 + line 625 + line 626

Other short-term liabilities
F#1, line 690 - line 620

Long-term liabilities
F#1, line 590

Shareholders' equity

According to RAS before 2000	According to RAS from 2000
F#1, line 490 - line 390	F#1, line 490

Key financial ratios

Operating margin ROS (%).

Operating margin =	F#2 (line 050) * 100	=	Sales - CGS*

	F#2, line 010		CGS*

EBT margin (%).
F#2, [line 140 * 100]/[line 020 + line 030 + line 040] = EBT/[CGS* + SG&A]

* According to RAS (F#2, line 020) including Depreciation

Net profit margin (%).
Indicator of profitability. Measures overall efficiency of company. Shown as a percentage.

Return on sales =	F#2, [line 190]*100%

	F#2, [line 020 + line 030 + line 040]

Return on assets (ROA).
The ratio of net income to total assets. Measures the return on total assets after interest and taxes. Shown as a percentage.

Return on assets =	F#2, [line 190]*100%

	Average asset value for the year (quarter-based estimate)

Return on equity (ROе).
Indicator of profitability. Determined by dividing net profit by common stock equity (adjusted for stock splits). Shown as a percentage.

ROE =	F#2, [line 190] * 100%	=	Net profit

	Average equity for the year (quarter-based estimates)		Equity

Current ratio.
The current ratio is computed by dividing current assets by current liabilities. Current assets normally include cash, marketable securities, accounts receivable and inventories. Current liabilities consist of accounts payable, short-term notes payable, current maturities of long-term debt, accrued income taxes and other accrued expenses.

Current ratio =	F#1, [line 290]	=	Current assets

	F# 1, line 690 - [line 640 + line 650]		Current liabilities

Quick ratio.
This ratio is estimated by deducting inventories from current assets and then dividing the remainder by current liabilities. Inventories are typically the least liquid of a firm's current assets, hence they are the assets on which losses are most likely to occur in the event of liquidation. Therefore, a measure of the firm's ability to pay-off short-term obligations without relying on sale of inventories is important. Russian standards allows this ratio to have value above 1.

Quick ratio =	F#1, [line 230 + line 240 + line 250 + line 260]

	F# 1, [line 610 + line 620]

Receivables in days of sales.
This indicator measures company efficiency in management of accounts receivable.

Receivables turnover =	Average receivables for the period (quarter-based estimate)

	Sales (F#2, [line 010]) / number of days in period

Payables in days of CGS (cost of goods sold).

Payables in days of CGS =	Average receivables for the period (quarter-based estimate)

	(CGS+SG&A) F#2, [line 020 + line 030 + line 040] / number of days in period

Key sectoral ratios

Sectoral ratios are among the most important market multiples, and are estimated as a company's financial results or market ratios divided by its capacity. Sectoral ratios enable comparison between companies in the same sector, and are crucial for determination of target share prices.

Income/line.
This gives a company's income per switched access line.

Income/line =	Revenues from main activities

	Switched capacity

Income/Employee.
Shows income that a company receives from one employee.

Income/Employee =	Revenues from main activities

	Employee

Lines/Employee.

Lines/Employee =	Switched capacity

	Employee