13. Intangible assets

Intangible assets, which amount to €5,275 million (€5,076 million at 31 December 2014) break down as follows:

Service concession agreements (€4,361 million; €4,199 million at 31 December 2014) refer to agreements between the public and private sectors on the development, financing, management and maintenance of infrastructure under concession by a contracting party. The provisions relating to the service concession agreements are applicable for Snam in its role as a public service natural gas distributor, i.e. applicable to the agreements under which the operator is committed to providing the public natural gas distribution service at the tariff established by the AEEGSI, holding the right to use the infrastructure, which is controlled by the grantor, for the purposes of providing the public service.

Within the regulatory framework that assigns the gas distribution service through tenders by geographical area²⁰ (and not by individual municipality), in the last quarter of 2015, 13 calls for tenders were published to assign the natural gas distribution service in 14 minimum geographical areas (ATEM), 7 of which where Italgas operates. At 31 December 2015, Italgas, as a result of information disclosure requests required by law, had prepared and submitted documentation relating to approximately 550 municipalities.

Industrial patent rights and intellectual property rights of €181 million (€159 million at 31 December 2014) mainly concern information systems and applications in support of operating activities.

Concessions, licences, trademarks and similar rights (€660 million, the same as at 31 December 2014) refer essentially to concessions for the natural gas storage business (€657 million). The value of the storage concessions is represented by the reserves of natural gas in the fields (“cushion gas”²¹).

Intangible assets with an indefinite useful life (€9 million, unchanged since 31 December 2014) consist only of the goodwill recognised in 2008 following the acquisition by Italgas of 100% of the shares of Siciliana Gas. The goodwill was allocated to the CGUs represented by the ATEM where the purchased assets were dispersed.

Investments (€426 million) refer mainly to the distribution (€373 million) and transportation (€37 million) segments²².

Capital contributions from government authorities and other entities (€362 million and €386 million respectively, compared with €364 million and €376 million respectively at 31 December 2014) are recorded as a deduction in the net value of property, plant and equipment and refer essentially to the natural gas distribution segment.

Changes in the scope of consolidation (€105 million, net of the related provisions for depreciation, amortisation and impairment losses) relate to the acquisition of control by Italgas S.p.A. of Acam Gas S.p.A.²³

Amortisation (€301 million) refers to economic and technical amortisation determined on the basis of the finite useful life of the intangible assets or their remaining possible use by the Company.

Due to the nature of the activities carried out by the Group, i.e. 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 AEEGSI, net of flat-fee components²⁴, 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 AEEGSI for the definition of the 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 regulations, the CGUs are identified with supra-municipality minimum geographical areas (ATEM).

As defined above, the recoverable value of property, plant and equipment, including compulsory inventories, and intangible assets is around €24.9 billion²⁵.

Divestments (€12 million, net of the related provisions for depreciation, amortisation and impairment losses) mainly concern sales of gas plants for the termination of the related concession arrangements and replacements of networks and meters.

Other changes (-€19 million, net of the related provisions for depreciation, amortisation and impairment losses) mainly concern (i) grants for the period (-€34 million); (ii) the effects arising from the merger by incorporation of Metano Arcore S.p.A. and SETEAP S.p.A. into Italgas S.p.A. and Napoletanagas S.p.A respectively, with an effective date of 1 January 2015 (+€15 million).

Contractual commitments to purchase intangible assets, and to provide services related to the development thereof, are reported in Note 24 – “Guarantees, commitments and risks”.

Intangible assets by business segment

As required by IFRS 8 – “Operating segments”, a breakdown of intangible assets by business segment is provided below: