8. Investments in associates

Investments in associates as at 31 December 2014 and 2013 were as follows:

Associate	Main activity	Voting share capital, %	2014 Carrying amount	2013 Carrying amount
LLC T2 RTK Holding	Communication services	45	72,848	-
OJSC Tsifrovoe televidenie	TV services	25.33	1,319	-
OJSC KGTS	Communication services	37.29	342	383
CJSC Samara Telecom	Communication services	27.78	158	163
OJSC WestBalt Telecom	Communication services	38	140	131
CJSC IKC Express	Communication services	37.9	80	83
OJSC Vostoktelecom	Communication services	25	88	81
Other	Various	-	73	77
Total investments in associates			75,048	918

In December 2014 the Group transferred shares of its subsidiaries NKS Media LLC, NMA CJSC, ArtMediaMarkt OJSC and 250 cash payment for the 25.33% share in OJSC Tsifrovoe televidenie. Fair value of the Group share in OJSC Tsifrovoe televidenie was 1,319 after the completion of transaction.

In 2014 the Group received dividends from its investments in equity accounted investees in the amount of 11 (2013: 8).

All associated companies are incorporated in Russia.

There are no contingent liabilities relating to the Group's interest in the associates.

Summarized financial information as at 31 December 2014 and 2013 and for the years then ended of the associates is presented below:

Aggregate amounts	2014	2013
Assets	226,096	3,143
Liabilities	126,935	407
Revenue	73,388	1,968
Net income	(669)	195

Summarized financial information for substantial associates as at 31 December 2014 and 2013 and for the years then ended is presented below:

Associate	Year	Non-current assets	Current assets	Non-current liabilities	Current liabilities	Revenue	Net income/(loss)
OJSC KGTS	2014	842	206	43	88	751	97
	2013	966	158	11	86	742	104
CJSC Samara Telecom	2014	278	362	23	51	165	12
	2013	310	396	21	100	201	15
OJSC WestBalt Telecom	2014	125	280	-	38	142	8
	2013	128	253	-	36	150	(1)
CJSC IKC Express	2014	12	217	-	18	55	(4)
	2013	13	213	-	8	72	6
OJSC Vostoktelecom	2014	285	124	5	55	502	30
	2013	102	287	5	59	595	31
T2 RTK Holding LLC	2014	197 834	20 269	69 141	53 578	71 529	(848)
	2013	-	-	-	-	-	-
OJSC Tsifrovoe	2014	1,931	1,090	10	1,723	-	-
televidenie	2013	-	-	-	-	-	-

Reconciliation of the summarised financial information presented to the carrying amount of the interest in associates:

Summarised financial information	OJSC Tsifrovoe televidenie	OJSC KGTS	CJSC Samara Telecom	OJSC WestBalt Telecom	CJSC IKC Express	OJSC Vostoktelecom
Net assets at December 31, 2014	1,287	917	567	366	211	349
Interest in associates, %	25.33	37.29	27.78	38	37.9	25
Goodwill	993	-	-	-	-	-
Carrying value at December 31, 2014	1,319	342	158	139	80	87

Investment in T2 RTK Holding LLC

	2014
At 1 January	-
Acquisition	73,339
Share of profit	(491)
At 31 December	72,848

Investment in T2 RTK Holding LLC was recognised as a result of the deal with the mobile operator Tele 2 Russia (refer to Note 1). There is no quoted market price available for its shares.

The carrying value of the investment at the acquisition date was determined with reference to the value of the assets transferred to T2 RTK Holding LLC based on the valuation report of an independent appraiser. The determination of the fair value was based on the following assumptions:

discount rates are estimated in nominal terms on pre tax basis. Nominal rates for discounting vary from 11.7% to 13.2%;
EBITDA margin is based on historical actual results and varies from 26% to 27%;
projected annual growth of revenue is at average 11.6%, projected annual growth of customer base is at average 8.7%;
terminal growth rate was 2.5%.

As at 31 December 2014 the Group conducted impairment testing of this investment in associate. Key assumptions used by management in impairment testing are as follows:

discount rates are estimated in nominal terms on pre tax basis. Nominal rate for discounting was 17.87%;
EBITDA margin varies from 22% to 45%;
projected annual growth of revenue is at average 16%, projected annual growth of customer base is at average 14%;
cash flow projections cover the period of twelve years, cash flows beyond twelve-year period are extrapolated using growth rate of 3%.

On the basis of the impairment testing the recoverable amount exceeded the carrying value of the investment in associate.

The group has no commitments relating to its associate. There are no contingent liabilities relating to the Group’s interest in the associate.

Summarised financial information for T2 RTK Holding LLC

Set out below are the summarised financial information for T2 RTK Holding LLC which is accounted for using the equity method.

Summarised statement of financial position
	31 December 2014
Current
Cash and cash equivalents	3,637
Other current assets (excluding cash)	16,631
Total current assets	20,268
Financial liabilities (excluding trade payables)	17,416
Other current liabilities (including trade payables)	36,162
Total current liabilities	53,578
Non-current
Assets	197,834
Financial liabilities	55,192
Other liabilities	13,949
Total non-current liabilities	69,141
Net assets	95,383

Summarised statement of profit or loss and other comprehensive income
	01 April - 31 December 2014
Revenue	71,529
Depreciation and amortisation	(13,046)
Interest income	188
Interest expense	(5,612)
Profit or loss from continuing operations	(278)
Income tax expense	(570)
Post-tax profit from continuing operations	(848)
Total comprehensive income	(848)

Reconciliation of summarised financial information to the carrying value of the investment
Summarised financial information
Opening net assets 1 April 2014	96,231
Profit/(loss) for the period	(848)
Closing net assets	95,383
Interest 45%	42,923
Goodwill	29,925
Carrying value	72,848

Investment in T2 RTK Holding LLC

Summarised financial information for T2 RTK Holding LLC

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