13. INTANGIBLE ASSETS AND GOODWILL
MEUR Intangible rights Other intangible assets Advances, intangible Goodwill Total
Financial year 2015
Acquisition cost 1 Jan 66.7 4.2 3.3 73.4 147.5
Increases 1.0 0.0 1.6 2.6
Acquisitions of business operations 38.2 0.1 0.6 53.7 92.7
Decreases -0.5 -0.2 -5.2 -5.8
Exchange differences 0.1 0.6 0.7
Transfers between items 3.5 -3.5
Acquisition cost 31 Dec 109.0 4.3 1.9 122.5 237.7
Accumulated depreciation, amortisation and impairments 1 Jan 33.3 2.6 3.7 39.6
Accumulated depreciation in decreases and transfers -0.4 -2.5 -2.9
Depreciation for the financial year 6.7 0.6 7.2
Write-downs 2.7 2.8
Accumulated depreciation, amortisation and impairments 31 Dec 39.7 3.2 3.9 46.8
Book value 1 Jan 33.3 1.6 3.3 69.7 107.9
Book value 31 Dec 69.3 1.1 1.9 118.6 191.0
MEUR Intangible rights Other intangible assets Advances, intangible Goodwill Total
Financial year 2014
Acquisition cost 1 Jan 65.2 3.1 2.8 72.4 143.4
Increases 0.2 0.5 2.1 2.8
Business combinations 0.7 3.8 4.5
Decreases -0.3 0.0 -2.7 -3.0
Exchange differences -0.1 -0.1 -0.2
Transfers between items 1.0 0.6 -1.6 0.0 0,0
Acquisition cost 31 Dec 66.7 4.2 3.3 73.4 147.5
Accumulated depreciation and write-downs 1 Jan 27.6 2.1 2.8 32.6
Accumulated depreciation in decreases -0.2 -1.1 -1.3
Depreciation for the financial year 5.9 0.5 0.0 6.4
Write-downs 0.1 1.9 2.0
Accumulated depreciation, amortisation and impairments 31 Dec 33.3 2.6 3.7 39.6
Book value 1 Jan 37.6 0.9 2.8 69.5 110.9
Book value 31 Dec 33.3 1.6 3.3 69.7 107.9
Decreases in goodwill concern the acquisitions made before the implementation of the revised IFRS 3.
Allocation of intangibles with indefinite lives to cash-generating units
The book value of intangible assets includes intangible rights totalling EUR 33.5 million which are not depreciated; instead, these rights are tested annually for impairment. In Alma Media, intangible assets with an indefinite useful life are trademarks measured at fair value at the time of acquisition. These non-depreciated intangible rights are allocated to the cash-generating units as follows:
MEUR 2015 2014
Digital Consumer Services
Marketplaces
Housing, cars 0.4 0.1
Recruitment 14.4 14.2
Diverso 1.0 1.1
Digital Consumer Services total 15.9 15.3
Financial Media and Business Services
Financial publication business 11.8
Information service, book and event business 3.5
Direct marketing 1.2
Objektvision 0.3 0.3
Alma 360 0.1
Financial Media and Business Services, total 16.8 0.4
Regional Media 0.7 0.7
Assets with indefinite lives, total 33.5 16.5
Allocation of goodwill to business operations
MEUR 2015 2014
A significant amount of goodwill has been allocated to the following cash-generating units
Digital Consumer Services
Marketplaces 44.3 42.8
Housing, cars 2.8 1.8
Recruitment 41.5 41.0
Diverso 6.3 7.4
Digital Consumer Services total 50.6 50.2
Financial Media and Business Services
Financial publication business 39.6
Information service, book and event business 12.7 3.3
Direct marketing 3.7
Objektvision 3.6 3.5
Alma 360 2.6
Financial Media and Business Services, total 59.7 9.5
Regional Media
Aamulehti 0.0
Alma Lapland 1.6 2.4
Satakunnan Kansa 4.0 4.0
Paikallissanomat 2.6 3.5
Regional Media total 8.1 9.9
Non-allocated goodwill 0.1 0.1
Total goodwill 118.6 69.7
Impairment testing of goodwill and intangibles with indefinite lives
Goodwill, intangible rights with indefinite useful lives and other long-term assets are tested at the level of cash generating units. In testing for impairment, the recoverable amount is the value in use.
Following the model used before, estimated cash flows determined in the test are based on the Group’s strategic forecasts for the following three years confirmed by the Board of Directors and business units’ management. The years following this period are estimated by the management, taking the business cycle into account. The calculations of value in use are based on a period of 10 years, as the customer relationships in the business are long-term and turnover is low. In addition, the management uses cash flow analyses of 10 years to support business decisions in connection with corporate acquisitions. The cash flow of the terminal year is normalised as an average of the forecast period. In addition to general economic factors, the main assumptions and variables used when determining cash flows are the forecast growth of advertising sales in different market segments, the unit-specific average cost of capital (discount rate) and estimated growth of newspaper content sales. The growth rate assumptions for advertising sales vary in different market segments and in different product categories. When evaluating growth, past events in the Group and the impact of business cycles are taken into account.

The Group’s business, advertising sales in particular, is very dependent on business cycles. A significant portion of the Group’s revenue is generated from advertising sales. Advertising sales correlates significantly with changes in the gross national product, and changes in advertising sales are largely intensified at cyclical turns. Investments in advertising have been particularly low in Finland in relation to the level of GNP in 2010–2015, even in international comparison. Alma Media estimates that the gross national product will start growing in the domestic market. The growth assumptions for revenue and costs used in the value in use calculations are presented in the table below.

According to its strategy, the Group has invested in the development of digital services. Digital services account for approximately 37% of the Group’s revenue. In digital services, the realised changes are larger and the future growth assumptions higher than in average advertising investments. With regard to the printing business, moderate revenue growth assumptions have been used in impairment testing.
The discount rate used in impairment testing has been determined using geographical (country) and business-specific weighted average cost of capital (WACC) separately for both publishing & newspapers and online business segments. The discount rate is determined net of taxes. The WACC consists of the required return on equity and the required return on debt after corporate taxes (net of taxes as adjusted for final presentation purposes). Following capital market theory, the generally accepted method of estimating the cost of equity is the Capital Asset Pricing Model (CAPM). Following the CAPM, the rate of return on equity can be constructed from the risk free interest rate and a risk premium. Elements of WACC/CAPM have been determined for impairment testing by an independent third party analyst.
Discount rates used in impairment testing
Revenue growth assumption, % Cost growth assumption, % WACC before taxes, % Business line
Digital Consumer Services
Marketplaces
Housing, cars Finland 1.6 1.7 10.5 Online
Recruitment Finland 3.5 3.0 10.4 Online
Baltic countries 4.6 4.0 13.0
Czech Republic 1.7 1.5 12.0
Slovakia 3.1 1.3 12.5
Croatia 2.0 1.2 16.5
Alma Diverso Finland 1.8 -1.3 10.5 Online
Financial Media and Business Services
Financial publication business Finland, Sweden 0.4 0.1 9.2 Publishing, Online
Information service, book and event business Finland, Baltic countries 0.8 1.0 9.1 Publishing, Service, Online
Direct marketing Finland, Baltic countries 0.1 0.6 9.2 Service
Objektvision Sweden 1.7 2.0 11.5 Online
National Consumer Media Finland -0.5 -0.6 9.0 Publishing, Online
Regional Media
Aamulehti Finland -0.1 -0.2 7.8 Publishing
Alma Lapland Finland 0.4 0.2 7.8 Publishing
Satakunnan Kansa Finland 0.0 0.1 7.7 Publishing
Local papers Finland 0.1 0.2 7.9 Publishing
Alma Manu Finland 0.9 0.9 8.9 Publishing
Impairment losses and their allocation
During the past financial year, the Group recognised MEUR 1.6 in impairment losses on goodwill. Of this impairment loss, MEUR 0.5 is allocated to the goodwill of Alma Lapland, and MEUR 1.1 is allocated to the Alma Diverso business. Alma Lapland is reported under the Regional Media segment. After the recognition of the impairment loss, asset items of MEUR 2.0 are allocated to Alma Lapland. Diverso is reported under the Digital Consumer Services segment. After the recognition of the impairment loss, asset items of MEUR 7.8 are allocated to the Diverso business.
In the management’s view, there are no indications of impairment with regard to the other units of Alma Media Group.
In the previous financial year, the Group recognised MEUR 1.9 in impairment losses on goodwill. The impairment loss was recognised for the goodwill of Alma Lapland at MEUR 1.3, the goodwill of the Alma 360 customer magazine business at MEUR 0.5, and the goodwill of the Meedio.fi business at MEUR 0.1. Alma Lapland is reported under the Regional Media segment. After the recognition of the impairment loss, asset items of MEUR 3.2 are allocated to Alma Lapland. The customer magazine business of Alma 360 is reported under the Financial Media and Business Services segment. After the recognition of the impairment loss, asset items of MEUR 2.8 are allocated to the Alma 360 business. The key cause of the impairment loss is the poor outlook for northern regional newspapers and the customer magazine business.
Sensitivity analyses of impairment testing
Goodwill allocated to new business areas, as well as goodwill arising from recent acquisitions, is more sensitive to impairment testing and therefore more likely to be subject to impairment loss when the above main assumptions change.
In connection with the sensitivity analysis, the impact of an increase in the discount rate (at most 3%), a decrease in advertising sales (at most 6%) and a decrease in the circulation sales (at most 3%) on estimated cash flows has been estimated. The sensitivity analysis of advertising sales and circulation sales is based on the management view of the future development on the balance sheet date.
The aggregate book values of the Digital Consumer Services segment were approximately 41% of the current value of the estimated recoverable amount at the time of testing. The impact of the terminal on the value in use varied between 26% and 42%. On the basis of the sensitivity analysis, the Diverso business is more sensitive to impairment losses caused by potential changes in assumptions. Following the recognition of impairment, the book value of the unit’s assets is MEUR 7.8. Based on impairment testing carried out by the management, the assets of the segment’s recruitment businesses do not involve a material measurement risk. The book value of the assets of the entire Recruitment business area at the time of reporting is MEUR 66.1. On the basis of the sensitivity analysis, the measurement of the assets and goodwill of the other business operations of the segment do not contain risk of impairment.
The aggregate book values of the Financial Media and Business Services segment were approximately 45% of the current value of the estimated recoverable amount at the time of testing. The impact of the terminal on the value in use was 38–47% in the calculations. The segment’s impairment testing (book values and present values of recoverable amounts) includes the business operations of Talentum acquired in November. The business services of Kauppalehti and Talentum complement each other and constitute a comprehensive offering for the B2B market. Talentum’s Finnish publication business and Kauppalehti Media constitute one CGU level for testing. On the basis of the sensitivity analysis, the measurement of the assets and goodwill of the segment do not contain risk of impairment.
The aggregate book values of the National Consumer Media segment amounted to approximately 0% of the current value of the estimated recoverable amount at the time of testing. The impact of the terminal on the value in use was 50% in the calculations. When the recoverable amount of the segment is assessed, a change in the key variables would not lead to the recognition of impairment losses according to the sensitivity analysis.
The aggregate book values of the Regional Media segment were approximately 56% of the current value of the estimated recoverable amount at the time of testing. The impact of the terminal on the value in use varied between 50% and 56%. Based on sensitivity analysis, the Alma Lapland and Satakunnan Kansa businesses contain a risk of the potential recognition of impairment. At the time of reporting, the book value of the assets of Alma Lapland and Satakunnan Kansa was MEUR 6.7.

As part of the segment’s impairment testing, the recoverable amount of the Group’s printing facility has been estimated. The unit’s value in use is based on the printing facility’s remaining useful life. The values of Alma Manu’s assets have been estimated both as part of the value formation of Aamulehti’s and Satakunnan Kansa’s products, and as part as Alma Manu’s value in use as a separate unit. Based on the testing, the value of the printing facility does not contain a risk of impairment.
Risk of impairment according to the sensitivity analysis when the assumptions change:
Permanent decrease in content sales
MEUR 1% 2% 3%
Regional Media
Alma Lapland 1.8 2.0 2.0
Satakunnan Kansa 1.0
Permanent decrease in advertising sales Increase in WACC
MEUR 2% 4% 6% 1% 2% 3%
Digital Consumer Services
Diverso 0.1 0.1 0.1 0.1 0.1 0.4
Regional Media
Satakunnan Kansa 1.6 4.0
Alma Lapland 2.0 2.0 2.0 0.8 1.0 1.1
Of the results of the sensitivity analysis, the table presents the risk of impairment if a permanent decrease in sales takes place in deviation from the management’s assumptions.