13 Intangible assets

Intangible assets of €4,593 million (€4,444 million at 31 December 2011) comprise:

Concession arrangements (€3,767 million) relate to natural gas distribution activities carried out under the concession system as assigned by local public authorities. Legislative Decree 164/00 (the Letta Decree) established a new maximum duration of 12 years for concessions awarded by a tender process. 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 ATEM).

In 2012, Italgas won the tender to distribute natural gas in Rome (a concession it held previously until 31 December 2009), securing the operational management of Italy’s biggest concession by size (nearly 5,000 km of network) and by number of users (more than 1.3 million redelivery points) for another 12 years. To cover the distribution service concession fee of €875 million, the Company disposed of assets with a net book value totalling €891 million.

Industrial patent rights and intellectual property rights of €122 million (€87 million at 31 December 2011) mainly concern information systems and applications in support of operating activities.

Concessions, licences, trademarks and similar rights (€659 million) refer entirely to concessions for the natural gas storage business.

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 – regulatory 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 €388 million (€433 million at 31 December 2011) refer mainly to: (i) the construction and upgrading of natural gas distribution infrastructure (€321 million); and (ii) investment projects in progress (€57 million), relating mainly to the development of information systems.

Other changes (€882 million) relate mainly to: (i) concession acquisitions to distribute natural gas in Rome (€875 million) and in other municipalities (€73 million); and (ii) grants for the period (-€48 million).

Government grants for capital expenditure and grants from other parties reducing the net value of intangible assets amounted respectively to €343 million (€373 million at 31 December 2011) and €487 million (€383 million at 31 December 2011) and essentially concern the natural gas distribution segment. At 31 December 2012, uncollected government grants amounted to €1 million (€6 million 31 December 2011).

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 greater than €23 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.