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|
|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:
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)|
|CJSC Samara Telecom||2014||278||362||23||51||165||12|
|OJSC WestBalt Telecom||2014||125||280||-||38||142||8|
|CJSC IKC Express||2014||12||217||-||18||55||(4)|
|T2 RTK Holding LLC||2014||197 834||20 269||69 141||53 578||71 529||(848)|
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|
|Carrying value at December 31, 2014||1,319||342||158||139||80||87|
Investment in T2 RTK Holding LLC
|At 1 January||-|
|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|
|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|
|Total non-current liabilities||69,141|
|Summarised statement of profit or loss and other comprehensive income|
|01 April - 31 December 2014|
|Depreciation and amortisation||(13,046)|
|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|