13 Intangible assets

Intangible assets of €4,444 million (€4,262 million at 31 December 2010) comprise:

Service concession agreements (€3,618 million) relate to natural gas distribution activities carried out under the concession system as assigned by local public authorities. With regard to the duration of the concessions, Legislative Decree No. 164/00 (the “Letta Decree”) established that all contracts must be put out to tender by the expiry of the “transitional period” (for Snam, by 31 December 2012) and that the new duration of the concessions may not exceed 12 years. In accordance with the provisions of the relevant legislation, tenders for new natural gas distribution concessions will no longer be issued by each municipality but exclusively by the multi-municipality minimum geographical areas (known as ATEMs)¹⁸.

Industrial patent rights and rights to use intellectual property of €87 million (€72 million at 31 December 2010) mainly concern information systems and applications in support of operating activities.

Concessions, licences, trademarks and similar rights (€686 million) refer mainly to concessions for the natural gas storage business (€655 million).

Intangible assets with an indefinite useful life consist only of the goodwill recognised following the acquisition by Italgas of 100% of the shares of Siciliana Gas (€9 million).

For the purposes of calculating recoverable value, goodwill has been allocated to the cash-generating unit consisting of natural gas distribution activities. The recoverable amount of the cash-generating unit was estimated by equity/income type valuations with reference to the value of the asset recognised for tariff purposes (RAB – Regulated Asset Base), as well as to additional income components deriving from the regulation, and is greater than the carrying amount of the cash-generating unit.

Investments in intangible assets of €433 million (€423 million at 31 December 2010) refer mainly to: (i) the construction and upgrading of natural gas distribution infrastructure (€362 million); and (ii) investment projects in progress (€48 million).

Recoveries of value (€9 million) have been recognised against some assets in the natural gas distribution segment on which impairment losses were recognised in 2010, due to the reduced cost of preparing plants for normal use.

Other changes (-€47 million) essentially consist of grants during the period (-€57 million).

Government grants for capital expenditure and grants from other parties reducing the net value of intangible assets amounted respectively to €373 million (€374 million at 31 December 2010) and €383 million (€355 million at 31 December 2010) and essentially concern the natural gas distribution segment. At 31 December 2011, uncollected government grants amounted to €6 million (€3 million 31 December 2010).

The main amortisation rates adopted on an annual basis are the following:

Existing contractual commitments for the purchase of intangible assets, and of services related to their development, are disclosed in Note 28, “Guarantees, commitments and risks”.

Intangible assets by business segment

Intangible assets are broken down by business segment as follows:

The market value of fixed assets, including compulsory inventories and intangible assets, is estimated at €22 billion¹⁹ and was defined in keeping with the estimate of the value recognised (RAB) for such assets for purposes of compensation by the Electricity and Gas Authority.