2012 Half year financial report

The table below shows the breakdown of intangible assets as of 30 June 2012 and 31 December 2011, as well as movements during the period.

In thousands of Euros Development

licences and
Historical cost 102,694 200,757 148,296 557,322 4,908 43,803 1,057,343
Provisions for write-down 0
Accumulated depreciation (57,297) (160,811) (75,961) (110,382) (3,472) (407,923)
Assets as of
45,397 39,946 72,335 446,940 1,436 43,803 649,420
Investments 11,911 1,074 169 18,299 31,453
Transitions in the period 11,001 1,813 0 (12,814)
Depreciation (11,152) (8,241) (4,519) (380) (24,292)
Disposals (890) (24) 0 0 0 (914)
Write-downs 0
Exchange differences (266) (58) 68 (334) (590)
Other movements (2,923) 68 0 80 (2,775)
Total changes 7,681 (5,368) (4,519) 0 (143) 5,231 2,882
Historical cost 98,110 202,383 148,296 557,322 5,306 49,034 1,060,451
Provisions for write-down 0 0 0 0 0 0
Accumulated depreciation (45,032) (168,242) (80,480) (110,382) (4,013) (408,149)
Assets as of
53,078 34,141 67,816 446,940 1,293 49,034 652,302

The breakdown of intangible assets for the previous and under construction is as follows:

Value as of 30 June 2012 Value as of 31 December 2011
In thousands of Euros For the
Total For the
Total For the
R&D costs 53,078 44,825 97,903 45,397 39,986 85,383 7,681 4,839 12,520
Patent rights 34,141 4,000 38,141 39,509 3,697 43,206 (5,368) 303 (5,065)
Concessions, licences
and trademarks
67,816 72,335
72,335 (4,519)
Goodwill 446,940
446,940 446,940

Other 1,293 209 1,502 1,436 120 1,556 (143) 89 (54)
Total 603,268 49,034 652,302 605,617 43,803 649,420 (2,349) 5,231 2,882

Increases mainly refer to the capitalisation of development costs for new products and new engines.

Development costs include costs for products and engines in projects for which there is an expectation, for the period of the useful life of the asset, to see net sales at such a level in order to allow the recovery of the costs incurred.
Development expenditure for new projects capitalised during the first half of 2012 mainly refers to the new models Piaggio X10, Vespa India, Vespa 946, Aprilia Caponord, Moto Guzzi California and Nevada, as well as the Indian diesel engine.
Development costs included under this item are amortised on a straight line basis over a period ranging from 3 to 5 years, in consideration of their remaining useful life.
During the first half of 2012, development costs of approximately 9.6 million Euro were charged directly to the consolidated income statement.

The item Industrial patents and intellectual property rights comprises software for €/000 13,013 (of which €/000 3,525 under construction) and patents and know-how.
Patents and know-how mainly refer to the Vespa, GP 800, MP3, RSV4, MP3 hybrid, the 1200 cc engine and NT3 prototype. Increases for the period mainly refer to software.
The costs of industrial patents and intellectual property rights are amortised over a period ranging from 3 to 5 years, in consideration of their remaining useful life.

The item Trademarks, Concessions and Licences is broken down as follows:

In thousands of Euros As of 30 June 2012 As of 31 December 2011 Change
Guzzi trademark 22,851 24,375 (1,524)
Aprilia trademark 44,902 47,895 (2,993)
Minor brands 63 65 (2)
Total Trademarks 67,816 72,335 (4,519)

The gross value of the Aprilia brand is €/000 89,803, while that of Guzzi is €/000 36,559. The values of the Aprilia and Moto Guzzi trademarks are based on an assessment report of an independent third party which was specifically drafted during 2005. The above mentioned trademarks are amortised over a period of 15 years and no impairment indicators were identified.

Goodwill derives from the greater value paid compared to the corresponding portion of the subsidiaries shareholders’ equity at the time of purchase, less the related accumulated amortisation until 31 December 2003. During first-time adoption of the IFRS, the Group opted not to retroactively apply IFRS 3 - Business Combinations to acquisitions of companies that took place before 1st January 2004. As a result, the goodwill generated on acquisitions prior to the date of transition to IFRSs was maintained at the previous value, determined according to Italian accounting standards, subject to assessment and recognition of any impairment losses.
For all the transactions listed below, the difference between the carrying amount of the equity investment and the net book value has been attributed to goodwill.
The transactions which gave rise to this item are:

  • the acquisition by MOD S.p.A. of the Piaggio & C. Group, completed during 1999 and 2000 (net value as of 1st January 2004: €/000 330,590)
  • the acquisition, completed in 2001, by Piaggio & C. S.p.A. of 49% of the company Piaggio Vehicles Pvt. Ltd from the partner Greaves Ltd (net value as of 1 January 2004: €/000 5,192).
    This is in addition to the subsequent acquisition by Simest S.p.A. of a 14.66% stake in the share capital of Piaggio Vehicles Pvt. Ltd;
  • the acquisition, by Piaggio & C. S.p.A., of 100% of Nacional Motor S.A. in October 2003, at a price of €/000 35,040 with goodwill net of amortisation of €/000 31,237 as of 1 January 2004.
  • the acquisition, by Piaggio & C. S.p.A. of 100% of Aprilia S.p.A. in December 2004.

As part of the agreements for the acquisition of Aprilia, the company issued warrants and financial instruments in favour of Banks acting as creditors with respect to Aprilia and the selling shareholders; these could be exercised in periods determined by the respective regulations as of the date of approval of the consolidated financial statements as of 31 December 2007.
The initial purchase cost adjustment relating to the payment of Warrants and EMH Financial Instruments equal to €/000 70,706 was entered as goodwill.

Following the reorganisation by geographic segments which took place at the start of 2012, goodwill is broken down as follows:

In thousands of Euros
EMEA and Americas
30.06.2012 305,311 109,695 31,934 446,940
31.12.2011 305,311 109,695 31,934 446,940

As specified in the section on accounting standards, from 1 January 2004 goodwill is no longer amortised, but is tested annually or more frequently for impairment if specific events or changed circumstances indicate the possibility of it having been impaired, in accordance with the provisions of IAS 36 Impairment of Assets (impairment test).
The possibility of reinstating booked values is verified by comparing the net book value of individual cash generating units with the recoverable value (usage value). This recoverable value is represented by the present value of future cash flows which, it is estimated, will be derived from the continual use of goods referring to cash generating units and by the final value attributable to these goods.
The recoverability of goodwill is verified at least once per year (as of 31 December), even in the absence of indicators of impairment losses.
As of 30 June 2012, there were no indications of impairment losses for this asset.
The item "Other intangible assets" mainly refers to costs incurred by Piaggio Vietnam.