14. Goodwill - 147,082 thousand euros

At 31 December 2012 goodwill amounted to 147,082 thousand euros (151,244 thousand euros at 31 December 2011). The decrease of 4,163 thousand euros compared to the previous year is essentially due to adjustments to the value of goodwill emerging after the winding-up of the joint venture between Acea and GdF-Suez had been completed, particularly for Acea Energia Holding (201 thousand euros) and Acea Produzione (2,839 thousand euros). There was also a goodwill impairment which emerged at the time of the acquisition of Crea, referring to Gesesa (1,123 thousand euros).

The table below shows each CGU by industrial area:

€ thousand 31.12.2011 Purchases Impairments/Revaluations Other movements Total
Energy: 140,476 0 (3,040) 0 137,436
Acea Produzione 94,457   (2,839)   91,618
Acea Energia 45,327       45,327
Acea Energia Holding 692   (201)   491
           
Water: 1,896 0 (1,123) 0 773
Acque Blu Fiorentine 0       0
Gesesa 1,123   (1,123)   0
Laboratori 773       773
           
Environment: 8,872 0 0 0 8,872
ARIA 7,744       7,744
Aquaser Group 1,128       1,128
           
Goodwill 151,244 0 (4,163) 0 147,082

In compliance with IAS 36, said balance sheet item, given that it is an intangible asset with an indefinite useful life, is no longer subject to amortisation, but subject to an analysis of congruity on an annual basis or more frequently where events occur or there is a change of circumstances that may lead to impairments.

Goodwill emerging at the date of acquisition is allocated to each of the cash-generating units expected to benefit from the synergies deriving from the acquisition. Impairment charges are identified via tests that assess the capacity of each unit to generate cash sufficient to recover the portion of goodwill allocated to it.

On the basis of that principle, the estimated recoverable amount of goodwill recorded in the statement of financial position is realised by using the higher of the fair value less costs to sell and value in use of a group of assets that identifies the company or group of companies to which it belongs: the cash generating unit (or set of cash generating units).

The fair value is determined, taking into account information available to company management, on the basis of the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties.

The value in use is determined using the Discounted Cash Flow method, by discounting operating cash flows net of interest rates resulting from economic and financial projections based on assumptions in the budget plan drafted by management.

For the discounting of these flows, an explicit time period consistent with said forecasts was considered, i.e. with the average useful life of the assets, or with the duration of the concessions.

Use of the Discounted Cash Flow method provides for the discounting of estimate future cash flows, using the proper discount rate that reflects the current market assessments of the time value of money and risks specific to the asset (WACC).

 

The cash flow deriving from disposal at the end of the useful life (Terminal Value), prudentially estimated at zero or the sum of the estimate of the prospective value of fixed assets, net working capital and provisions.

The table below shows some of the CGUs to which is allocated a significant goodwill value compared with the overall value of goodwill recorded in the statement of financial position, specifying the discount rates used and time period of cash flows for each type of recoverable value considered. Following the impairment test, the values recorded were confirmed since they are recoverable.

Operating area / CGU Amount € millions Recoverable value Weighted Average Cost of Capital* Terminal value Cash flow period
Energy:          
Acea Produzione 91.6 value 7.0% Invested capital at year-end** End of useful life of assets
Acea Energia 45.3 value 8.6% Perpetuity without growth 2017
Environment:          
ARIA 7.7 value 6.8% Invested capital at year-end End of useful life of assets