15 Intangible assets

Intangible assets of €4,710 million (€4,593 million at 31 December 2012) comprise:

Concession agreements (€3,859 million) relate to natural gas distribution activities in Italy carried out under the concession system as assigned by local public authorities. Tenders for new natural gas distribution service concessions will no longer be issued by each municipality, but by the 177 multi-municipality minimum geographical areas (known as ATEMs) created by a dedicated Ministerial Decree, published in the Official Gazette in 2011.

Legislative Decree 164/00 stipulated that the new duration of the concessions, which must be put out to tender, may not exceed 12 years.

Industrial patent rights and intellectual property rights of €141 million (€122 million at 31 December 2012) mainly concern information systems and applications in support of operating activities.

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

Intangible assets with an indefinite useful life consist only of the goodwill recognised in 2008 following the acquisition by Italgas of 100% of the shares of Siciliana Gas (€9 million).

Investments in intangible assets of €394 million (€388 million at 31 December 2012) refer mainly to: (i) the construction and upgrading of natural gas distribution infrastructure (€319 million); and (ii) investment projects in progress (€64 million), relating mainly to the development of information systems.

Other changes (-€32 million) relate essentially to: (i) grants for the period (-€46 million); and (ii) the acquisition of concessions to exercise natural gas distribution activities (+€14 million).

Government grants for capital expenditure and grants from other parties reducing the net value of intangible assets amounted respectively to €368 million (€343 million at 31 December 2012) and €365 million (€487 million at 31 December 2012) and essentially concern the natural gas distribution segment. At 31 December 2013, uncollected government grants amounted to €1 million (the same as at 31 December 2012).

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 30, “Guarantees, commitments and risks”.

Intangible assets by business segment

Intangible assets are broken down by business segment as follows:

Due to the nature of the activities carried out by the Group, or of regulated activities in the gas supply chain, the recoverable value of property, plant and equipment and intangible assets was defined in keeping with the estimated value of net invested capital recognised for such assets for tariff purposes (regulatory asset base, or RAB) by the Electricity and Gas Authority, net of flat-fee components¹⁸, the provision for employee severance pay (TFR) and grants received.

For the purposes of identifying cash-generating units (CGUs) and allocating any goodwill, in accordance with the segmentation defined by the Electricity and Gas Authority for the definition of return on assets, the CGUs are represented by the business units (BUs) that carry out regulated activities in the natural gas transportation, regasification, storage and distribution sectors. For the distribution sector, in view of the specific applicable regulation, the CGUs are identified with ATEMs.

The recoverable value of property, plant and equipment, including compulsory inventories, and intangible assets is around €23.7 billion¹⁹.