3.3 INVESTMENTS IN INFRASTRUCTURE PROJECTS

3.3.1. Intangible asset model

The most significant changes in 2017 were as follows:

• Exchange rate fluctuations resulted in a reduction of EUR -650 million (2016: increase of EUR 195 million) in the balance of these assets, the full amount of which was attributable to the change in the euro/US dollar exchange rate at the US toll roads (see Note 1.4).
• The assets relating to the US toll roads increased by EUR 477 million. The most significant of these increases in assets centred on the extension of the North Tarrant Express toll road (EUR 262 million -2016: EUR 281 million-) and the I-77 Mobility Partners LLC toll road (EUR 165 million -2016: EUR 67 million-), which are currently in the construction phase. The total investment in these toll roads includes a balance at 31 December 2017 of EUR 1,129 million (2016: EUR 807 million) relating to property, plant and equipment in the course of construction (see Note 5.3).
• “Impairment Losses” includes the estimated impairment losses on arrangements to which no goodwill has been allocated. These possible impairment losses were calculated using the same method as that indicated in Section 3.1. In 2017 the impairment loss recognised on the Euroscut Azores toll road was reversed (EUR 25 million) as a result of the improved projections for the toll road due to an increase in vehicle numbers (see Note 2.5).
• Also, “Investment in Other Infrastructure Projects” includes concession arrangements awarded to the Services Division that are classified as intangible assets under IFRIC 12, basically those relating to Autovía de Aragón Sociedad Concesionaria, S.A., with a net investment of EUR 115 million (2016: EUR 127 million) and various integral waste treatment plants located in Spain, mainly in Barcelona, Toledo and Murcia (Ecoparc de Can Mata, S.L.U., Gestión Medioambiental de Toledo, S.A. and Servicios Urbanos de Murcia, S.A.) among others, for a net amount of EUR 159 million (2016: EUR 162 million).

In the case of the infrastructure project companies, all their concession assets have been pledged as security for the existing borrowings (see Note 5.2). The borrowing costs capitalised in this connection in 2017 are detailed in Note 2.6.

The changes in these assets in 2016 were as follows:

3.3.2. Financial asset model

The assets accounted for using the financial asset model pursuant to IFRIC 12 relate mainly to amounts receivable at long term (more than twelve months) from governments in return for services rendered or investments made under a concession arrangement. The changes in the years ended 31 December 2017 and 2016 were as follows:

With respect to the account receivable relating to the Autema project, both the decree published in 2015 and the new decree published in 2016 have been appealed against cumulatively in one proceeding and, in this connection, no substantial changes were considered in addition to those already considered in relation to the treatment of the account receivable (see Note 6.5.1-a). As indicated in 6.5.1-a, the Company considers that there are very sound legal arguments to win the appeal and, therefore, it was resolved to continue to recognise the project as a financial asset. An impairment test was performed with respect to the goodwill that had been allocated to this project, and a loss of EUR 29 million was recognised (see Note 3.1.2). Based on the same assumptions as those used to calculate the impairment test on the goodwill, it was concluded that there was no impairment of the financial asset recognised at year-end.

3.3.3 Cash flow impact

The total cash flow impact of the additions to projects accounted for using the intangible asset and financial asset models amounted to EUR -371 million (see Note 5.3), which differs from the additions recognised in the consolidated statement of financial position primarily due to the following reasons:

• In projects in which the intangible asset model is applied, due to differences between the accrual basis and cash basis of accounting, as well as the capitalisation of the borrowing costs attributable to projects under construction, which do not generate cash outflows.
• In projects in which the financial asset model is applied, due to the increases in the account receivable as a balancing entry to income for services rendered, which do not generate cash outflows either.