Methodology of compiling Rating and information

Main principles

"Expert-400" Rating is based on the indicator describing volume of sales (works, services) in 2005. If for some specific reasons the indicator can not be applied (in case of banks or insurance companies), financial reporting data, economically close to the indicator in maximum degree, is used.

Additional information is provided by the list of 200 largest companies in terms of their market price (capitalization) by September 1, 2006 — "Capitalization-200".

Other characteristics, like volume of sales in 2004, profit, market of securities etc., are presented to make the picture more complete.

Notes to compiling "Expert-400"

Participation in "Expert-400" has no sectoral limitations. As a result almost all main economic spheres are covered in the Rating. Companies were rated on the basis of their ranking by volume of sales (works, services) in 2005. The volume of sales, depending on a profile of a particular company, means:

In case of holdings their daughter companies were not included in the list to avoid double count. But the scope of RAO UES of Russia, oil companies and Sviazinvest is big enough for its daughters to claim high positions in the Rating. Therefore to make the information more complete we have presented a separate list of largest enterprises in electric energy industry, oil-and-gas industry and telecommunications.

To convert 2005 revenues of a company to other currency we used weighted average dollar rate — 28.29 rub/dollar, euro — 35.26 rub/euro, pound sterling — 51.53 rub/pound sterling, revenues in 2004 — weighted average dollar rate — 28.82 rub/dollar, euro — 35.82 rub/euro, pound sterling — 52.77 rub/pound sterling. For calculation of capitalization in companies we used rate for September 1, 2006 — 26.73 rub/dollar. All other things equal, priority was given to reporting data, prepared in keeping with the International Standards of Financial Reporting or GAAP in developed countries, and if a company failed to present such reporting, its personal data were taken into consideration. If the personal data was nor supported by a copy of audited reporting in keeping with a corresponding standard, and it was not found at the open access to other sources, the reporting was considered to be "management reporting" (simply "management" for the Russian Accounting Standards). Besides, if the company structure changed comparing with the previous year or the company presented data in line with some other reporting standard, the previous year position was removed, since the data under such circumstances was considered to be incomparable.

Remarks related to making the list "Capitalization-200"

It is pointless to talk about the market price of securities unless they are traded. An issuer was considered as an applicant for the Rating, only if his shares were included in one of the following liquidity categories.

Category А. High liquidity. Securities are regularly traded at Russian or foreign stock markets. Deals were also made in time of calculation date.

Category B. Average liquidity. Security deals at Russian or foreign stocks markets are irregular. Within a month prior to calculation date at least one deal was made.

Category C. Satisfactory liquidity. Securities are allowed for circulation at least at one Russian or foreign stock exchange. No deals within a month prior to calculation date, but on the calculation date there is a stock exchange quotation to sell.

When determining the price of a share preference was given to trade areas with maximum trade turnover for this particular security, and if all other things were equal – to Russian trade areas.

As distinct from the Rating by volume of sales, holdings and their daughter structures were given equal treatment. The holding volume of sales has been determined by total sales of its daughters less internal business volume, but in case of calculation to count like this would be wrong.

How the information was gathered

Data collection about companies took place in three stages.

The first stage was preparatory. On the basis of former ratings, 2005 statistics, current statistics, mass-media information and data from regions a list of companies was made for potential participation in the Rating. After a preliminary selection about 1000 companies were left.

At the second stage the Rating applicant companies were interviewed. Main indicators of activity in 2004 and 2005 were on the agenda.

Finally, at the third stage the collected information gaps were filled by data from the Rosstat, ministries and agencies, corporation sites in Internet, and the data collected by analysts from investment companies and mass-media.

We are thankful to MICE Information-analytic service, RTS stock exchange, and Solid financial group for assisting us in compiling the information.

Our methodology was approved by PricewaterhouseCoopers in 1999-2001, 2004, 2005 and 2006.

The rating was made by:

Dmitry Grishankov (project manager), Dmitry Kabalinsky, Elena Popova (information gathering group manager), Oxana Vasilieva, Irina Velieva, Andrey Vinkov, Alexander Voronin, Irina Efanova, Stepan Jouline, Andrey Zemtsov, Alexander Ivanter, Anastasia Matveeva, Oleg Nikonov, Andrey Pleskevich, Andrey Popov, Ivan Rubanov, Maxim Rubchenko, Irina Rudykh, Elena Rytsareva, Pavel Samiev, Dmitry Sivakov, Ilya Stupin, Evgeny Fofin, Mikhail Fisunov, Alexey Khazbiev.