18 Intangible assets
| (€ million) |
Exploration rights |
Industrial patents and intellectual property rights |
Concessions, licenses, trademarks and similar items |
Service concession arrangements |
Intangible assets in progress and advances |
Other intangible assets |
Intangible assets with finite useful lives |
Intangible assets with indefinite useful lives – Goodwill |
Total | |||||||||||||||||||||||||||
| 2017 | ||||||||||||||||||||||||||||||||||||
| Net book amount at the beginning of the year | 1,092 | 255 | 259 | 31 | 148 | 164 | 1,949 | 1,320 | 3,269 | |||||||||||||||||||||||||||
| Additions | 91 | 5 | 17 | 1 | 60 | 17 | 191 | 191 | ||||||||||||||||||||||||||||
| Amortization | (65 | ) | (110 | ) | (84 | ) | (2 | ) | (25 | ) | (286 | ) | (286 | ) | ||||||||||||||||||||||
| Net (impairments) reversals | 18 | 18 | 18 | |||||||||||||||||||||||||||||||||
| Write-off | (24 | ) | (24 | ) | (24 | ) | ||||||||||||||||||||||||||||||
| Currency translation differences | (115 | ) | (1 | ) | (2 | ) | (118 | ) | (23 | ) | (141 | ) | ||||||||||||||||||||||||
| Other changes | (2 | ) | 32 | 49 | (74 | ) | (14 | ) | (9 | ) | (93 | ) | (102 | ) | ||||||||||||||||||||||
| Net book amount at the end of the year | 995 | 182 | 240 | 30 | 134 | 140 | 1,721 | 1,204 | 2,925 | |||||||||||||||||||||||||||
| Gross book amount at the end of the year | 1,504 | 2,485 | 1,466 | 52 | 140 | 1,101 | 6,748 | |||||||||||||||||||||||||||||
| Provisions for amortization and impairments | 509 | 2,303 | 1,226 | 22 | 6 | 961 | 5,027 | |||||||||||||||||||||||||||||
| 2016 | ||||||||||||||||||||||||||||||||||||
| Net book amount at the beginning of the year | 735 | 363 | 276 | 32 | 148 | 166 | 1,720 | 1,314 | 3,034 | |||||||||||||||||||||||||||
| Additions | 15 | 6 | 26 | 1 | 49 | 16 | 113 | 113 | ||||||||||||||||||||||||||||
| Amortization | (18 | ) | (113 | ) | (81 | ) | (2 | ) | (39 | ) | (253 | ) | (253 | ) | ||||||||||||||||||||||
| Net (impairments) reversals | 385 | 4 | 389 | 389 | ||||||||||||||||||||||||||||||||
| Write-off | (61 | ) | (61 | ) | (61 | ) | ||||||||||||||||||||||||||||||
| Currency translation differences | 36 | (4 | ) | 32 | 6 | 38 | ||||||||||||||||||||||||||||||
| Other changes | (1 | ) | 38 | (49 | ) | 21 | 9 | 9 | ||||||||||||||||||||||||||||
| Net book amount at the end of the year | 1,092 | 255 | 259 | 31 | 148 | 164 | 1,949 | 1,320 | 3,269 | |||||||||||||||||||||||||||
| Gross book amount at the end of the year | 2,216 | 2,462 | 1,467 | 52 | 153 | 2,599 | 8,949 | |||||||||||||||||||||||||||||
| Provisions for amortization and impairments | 1,124 | 2,207 | 1,208 | 21 | 5 | 2,435 | 7,000 | |||||||||||||||||||||||||||||
Exploration rights of €995 million (€1,092 million at December 31, 2016) comprised the residual book value of license and leasehold property acquisition costs relating to areas with proved reserves, which are amortized based on the UOP criteria and are regularly reviewed for impairment. Furthermore, they include the cost of unproved areas which are suspended pending a final determination of the success of the exploratory activity or until management confirms its commitment to the initiative. Capital expenditures of €91 million in the year (€15 million in 2016) related to signature bonus for the acquisition of new exploration acreage in Cyprus, Myanmar, Ivory Coast and the Isatay block in Kazhakstan.
The breakdown of exploration rights by type of asset was as follows:
| (€ million) | December 31, 2017 | December 31, 2016 | ||||||
| Proved licence and leasehold property acquisition costs | 403 | 497 | ||||||
| Unproved licence and leasehold property acquisition costs | 586 | 579 | ||||||
| Other mineral interests | 6 | 16 | ||||||
| 995 | 1,092 | |||||||
Concessions, licenses, trademarks and similar items for €182 million (€255 million at December 31, 2016) primarily comprised transmission rights for natural gas imported from Algeria of €141 million (€223 million at December 31, 2016).
Industrial patents and intellectual property rights of €240 million (€259 million at December 31, 2016) related to Eni gas e luce SpA for €121 million and Eni SpA for €108 million (€235 million at December 31, 2016) and essentially concerned costs for the acquisition and internal development of software and rights for the use of production processes and software.
Intangible assets in progress and advances of €134 million (€148 million at December 31, 2016) related for €78 million (€89 million at December 31, 2016) to capital expenditures in progress on natural gas pipelines for which Eni has acquired transport rights.
Other intangible assets with finite useful lives of €140 million (€164 million at December 31, 2016) comprised: (i) royalties for the use of licenses by Versalis SpA for €37 million (€40 million at December 31, 2016); (ii) the estimated costs of Eni’s social responsibility projects in relation to oil development programs in Val d’Agri and in the North Adriatic area connected to mineral rights under concession for €35 million (€41 million at December 31, 2016) following commitments made with the Basilicata Region, the Emilia Romagna Region and the Province and Municipality of Ravenna.
Other changes of goodwill of €93 million in 2017 related to the change in the scope of consolidation due to the sale to third parties of the company Eni Gas & Power NV subsidiary to which included the goodwill deriving from the former acquisition in Belgium of Nuon Belgium NV was allocated.
The criteria adopted by Eni for determining net impairments/reversals and the relevant breakdown by segment are reported in note 19 — Impairment/reversal of tangible and intangible assets.
The main amortization rates used were substantially unchanged from the previous year and ranged as follows:
| (%) | ||||
| Exploration rights | UOP - 33 | |||
| Transport rights of natural gas | 3 | |||
| Other concessions, licenses, trademarks and similar items | 3 - 33 | |||
| Service concession arrangements | 20 - 33 | |||
| Other intangible assets | 4 - 20 | |||
The carrying amount of goodwill at the end of the year was €1,204 million (€1,320 million at December 31, 2016) net of cumulative impairments charges amounting to €2,414 million (€2,524 million at December 31, 2016).
A breakdown of the stated goodwill by operating segment is provided below:
| (€ million) | December 31, 2017 | December 31, 2016 | ||||||
| Gas & Power | 932 | 1,025 | ||||||
| Exploration & Production | 179 | 202 | ||||||
| Refining & Marketing | 93 | 93 | ||||||
| 1,204 | 1,320 | |||||||
More information about goodwill is reported in note 19 — Impairment/reversal of tangible and intangible assets.