I need to calculate the FFO / Net debt ratio for 2022. Let me first understand what FFO (Funds From Operations) and Net debt are. **FFO (Funds From Operations)** is typically calculated as: - Profit from operating activities (or EBITDA-like measure) adjusted for non-cash items - Or more commonly in infrastructure/real estate: Net income + Depreciation/Amortization + Deferred taxes + Other non-cash items Looking at the data, I need to find a reasonable FFO proxy. Let me use: - Profit Loss From Operating Activities: 423,000,000 EUR (2022) - Plus Amortisation Expense: 299,000,000 EUR (2022) Actually, let me think more carefully. FFO is typically: - Net income before financing costs and taxes from operations, adjusted for non-cash items - Or: Operating profit + depreciation/amortization - taxes paid +/− working capital changes A common approach for FFO in corporate analysis: FFO = Profit from operating activities + Depreciation/Amortization - Cash taxes ± Working capital changes But actually, looking at cash flow data, I can use: - Cash Flows From Used In Operating Activities: 1,002,000,000 EUR However, FFO is typically before working capital changes and is more like: - Profit before tax from continuing operations + Interest expense + Depreciation/Amortization - Taxes paid Let me try a more standard FFO calculation for infrastructure companies: FFO = Profit Loss From Operating Activities + Amortisation Expense + Depreciation Wait - "Profit Loss From Operating Activities" at 423,000,000 EUR likely already includes amortization/depreciation as expenses. So I should add back amortization/depreciation. From the data: - Profit Loss From Operating Activities: 423,000,000 EUR (2022-01-01 to 2023-01-01) - Amortisation Expense: 299,000,000 EUR (2022-01-01 to 2023-01-01) But wait, I need to check if there are "Adjustments For Reconcile Profit Loss" which might give us a better cash-based FFO. Looking at the cash flow reconciliation: - Adjustments For Reconcile Profit Loss: -697,000,000 EUR (this is confusing, seems to be adjustments to reconcile profit to cash flow) Let me look at this differently. The standard FFO formula used by rating agencies for infrastructure is: FFO = Net income from continuing operations + Depreciation/Amortization + Deferred income taxes + Other non-cash items Or more practically from cash flows: FFO = Cash flow from operating activities - Change in working capital + Income taxes paid - Interest received + Interest paid Actually, let me use a simpler and more common approach: FFO = EBITDA - Cash taxes ± Change in working capital Or from the available data, let me calculate: FFO = Profit Loss From Continuing Operations + Amortisation Expense + Interest expense equivalent Looking at the cash flow statement items more carefully: - Cash Flows From Used In Operating Activities: 1,002,000,000 EUR But this includes working capital changes. FFO typically excludes working capital changes. Let me try: FFO = Profit Loss From Operating Activities + Amortisation Expense + Finance costs (or adjustments) Actually, a more standard FFO for credit analysis: FFO = Net income + Depreciation/Amortization + Deferred taxes + Other non-cash charges - Gain on asset sales From the data: - Profit Loss From Continuing Operations: 238,000,000 EUR - Plus Amortisation Expense: 299,000,000 EUR - Plus Adjustments For Finance Income Cost (interest): 320,000,000 EUR (this is added back in cash flow) - Plus Adjustments For Income Tax Expense: -30,000,000 EUR (negative, so subtract) - Plus Adjustments For Undistributed Profits Of Investments: -165,000,000 EUR Hmm, let me look at the cash flow reconciliation more carefully. The "Adjustments For Reconcile Profit Loss" is -697,000,000 EUR, which when added to profit should give operating cash flow before working capital. Actually, let me try a different approach. Looking at EBITDA-like measures: From the income statement approach: - Revenue: 7,551,000,000 - Operating Expense: 6,825,000,000 - Profit Loss From Operating Activities: 423,000,000 Wait, let me check: Revenue - Operating Expense = Gross Profit? No... - Gross Profit: 728,000,000 - Then we have various items to get to Profit From Operations Before Impairment: 429,000,000 - Then after impairment: Profit Loss From Operating Activities: 423,000,000 So FFO could be: Profit Loss From Operating Activities + Amortisation Expense = 423,000,000 + 299,000,000 = 722,000,000 But this misses depreciation. Let me check if Property Plant And Equipment depreciation is separate. The "Amortisation Expense" of 299,000,000 likely includes depreciation of intangibles and possibly PPE depreciation is included in operating expenses. Actually, looking more carefully at typical FFO calculation for Ferrovial-type companies: FFO = Cash flow from operating activities before changes in working capital From cash flow data: - Cash Flows From Used In Operating Activities: 1,002,000,000 - Less: Increase Decrease In Working Capital: 83,000,000 (positive means source of cash, so working capital provided cash) - Less: Income Taxes Paid Refund: 82,000,000 (paid, so outflow) - Less: Dividends Received: 284,000,000 (this is typically included in FFO for some definitions) Actually, FFO before working capital changes = Operating cash flow - Working capital changes = 1,002,000,000 - 83,000,000 = 919,000,000? No wait, if working capital increased by 83m and that's a positive in cash flow, it means working capital was a source of cash. Let me re-read: "Increase Decrease In Working Capital" 2022: 83,000,000 EUR. In cash flow statements, this is typically the adjustment. If it's positive 83m in the cash flow, and operating cash flow is 1,002m, then cash flow before working capital would be 1,002m - 83m = 919m. But wait - I need to check if dividends received are part of FFO. Typically for infrastructure companies with associates, dividends received from associates are part of FFO. Let me try yet another approach. The most common FFO definition for corporate credit analysis: FFO = Net income + Non-cash charges (D&A, deferred taxes, provisions) - Gain on asset sales + Interest expense + Minority interest From data: - Profit Loss: 302,000,000 (total including discontinued) - Or Profit Loss From Continuing Operations: 238,000,000 - Plus Amortisation Expense: 299,000,000 - Plus Adjustments For Income Tax Expense (deferred tax add-back?): Looking at cash flow, income tax paid was 82m, but tax expense was 30m... this is confusing. Let me look at the cash flow reconciliation more carefully: - Adjustments For Reconcile Profit Loss: -697,000,000 This seems to be the total adjustments to reconcile profit to operating cash flow. But it's negative, which is odd if we're adding back non-cash items. Actually, re-reading: "Adjustments For Reconcile Profit Loss" 2022: -697,000,000. This might mean adjustments TO profit, not additions. Let me check: if Profit Loss is 302m, and adjustments are -697m, that would give -395m, which doesn't match operating cash flow of 1,002m. Wait, I think I need to look at this more carefully. The "Adjustments For Reconcile Profit Loss" might be part of a larger reconciliation. Let me see: Looking at all adjustment items: - Adjustments For Reconcile Profit Loss: -697,000,000 - Adjustments For Non Controlling Interests: 116,000,000 - Adjustment For Net Profit Loss From Discontinued Operations: -64,000,000 - Adjustments For Income Tax Expense: -30,000,000 - Adjustments For Undistributed Profits Of Investments: -165,000,000 - Adjustments For Finance Income Cost: 320,000,000 - Adjustments For Gain Loss On Disposals: 6,000,000 - Ajustes Al Resultado Por Gastos Por Depreciacion YAmortizacion: 299,000,000 Let me sum these to see if they reconcile: -697 + 116 - 64 - 30 - 165 + 320 + 6 + 299 = ? -697 + 116 = -581 -581 - 64 = -645 -645 - 30 = -675 -675 - 165 = -840 -840 + 320 = -520 -520 + 6 = -514 -514 + 299 = -215 Hmm, that doesn't equal the operating cash flow. These might not all be part of the same reconciliation. Let me try a different FFO approach. For infrastructure companies, a common FFO is: FFO = EBITDA - Cash taxes + Dividends from associates - Maintenance capex Or more simply from available data, let me use: FFO = Cash Flows From Used In Operating Activities + Cash taxes paid - Dividends received + Interest paid = 1,002,000,000 + 82,000,000 - 284,000,000 + Interest paid Interest paid classified as financing: 329,000,000 So: 1,002,000,000 + 82,000,000 - 284,000,000 + 329,000,000 = 1,129,000,000 But this includes working capital changes. FFO typically excludes working capital. FFO before working capital = 1,129,000,000 - 83,000,000 = 1,046,000,000? Actually, I think I'm overcomplicating this. Let me use a simpler standard definition: FFO = Profit from operating activities + Depreciation/Amortization + Interest expense - Cash taxes = 423,000,000 + 299,000,000 + 320,000,000 (finance cost) - 82,000,000 (taxes paid, not the 30m expense) Wait, the 320,000,000 "Adjustments For Finance Income Cost" is the add-back, not the actual finance cost. The actual finance cost was -320,000,000 (from "Finance Income Cost"). Let me try: FFO = EBIT + D&A - Cash taxes = Profit From Operations Before Impairment (429m) + Impairment (6m) + Finance cost... no that's not right. Actually, let me look at "Profit From Operations Before Impairment And Disposals Of Non Current Assets" = 429,000,000. This is EBIT essentially. FFO = EBIT + D&A - Cash taxes = 429,000,000 + 299,000,000 - 82,000,000 = 646,000,000 But this excludes dividends from associates which are important for Ferrovial. Or: FFO = Operating cash flow - Working capital changes + Dividends received (if they were deducted)... Let me try yet another approach using the standard cash flow to FFO: Operating cash flow: 1,002,000,000 Less: Working capital benefit: 83,000,000 (remove this as it's not sustainable) Less: Dividends received: 284,000,000 (these are typically kept in FFO for infrastructure) Plus: Taxes paid (to get pre-tax): already included in operating cash flow as outflow Actually, for FFO we want to add back taxes paid to get a pre-tax measure, or use after-tax FFO. Standard FFO (after tax) = Operating cash flow - Working capital changes = 1,002,000,000 - 83,000,000 = 919,000,000 But this includes interest paid (which is typically excluded from FFO, or rather, FFO is before interest). Actually no - operating cash flow typically includes interest paid (under IFRS, can be classified as operating or financing). Looking at the data, "Interest Paid Classified As Financing Activities" = 329,000,000, so interest is in financing, not operating. Good. So FFO = Operating cash flow - Working capital changes = 919,000,000? But wait, is the 83m working capital a source or use? "Increase Decrease In Working Capital" = 83,000,000. If this is positive in the cash flow statement, it means decrease in working capital (source of cash). So to get FFO before working capital, we subtract this benefit: 1,002,000,000 - 83,000,000 = 919,000,000. But I need to check if dividends received are part of operating cash flow. "Dividends Received Classified As Operating Activities" = 284,000,000. These are typically included in FFO. Let me verify with another calculation. From the income statement: - Profit Loss From Continuing Operations: 238,000,000 - Plus Amortisation: 299,000,000 - Plus other non-cash: ? - Plus interest expense: 320,000,000 (finance cost) - Less taxes: ? This gives 238 + 299 + 320 = 857,000,000 before taxes. After cash taxes of 82m: 775,000,000. Add dividends received 284m: 1,059,000,000. This is close to my 919m or 1,002m operating cash flow. Actually, I think the cleanest FFO for this company is: FFO = Cash Flows From Used In Operating Activities - Increase Decrease In Working Capital + Income Taxes Paid Refund = 1,002,000,000 - 83,000,000 + 82,000,000 = 1,001,000,000 Or simply use operating cash flow as FFO proxy if working capital is not material, but 83m is somewhat material. Let me use a more conservative and standard approach: FFO = EBITDA - Cash taxes + Dividends from associates - Maintenance capex But I don't have maintenance capex split out. For simplicity and given data availability, let me use: **FFO = Cash Flows From Used In Operating Activities = 1,002,000,000 EUR** Or more precisely, FFO before working capital changes: **FFO = 1,002,000,000 - 83,000,000 + 82,000,000 (taxes paid, to get pre-tax? No, FFO is after tax)** Actually, standard FFO is after tax. So: FFO = Operating cash flow - Working capital changes = 1,002,000,000 - 83,000,000 = 919,000,000 But some definitions include working capital. Let me check rating agency standards. For corporate infrastructure, Moody's/S&P typically use: FFO = Funds from operations = Net income from continuing operations + D&A + deferred taxes + other non-cash charges - gain on asset sales + minority interest + interest expense From data: - Profit Loss From Continuing Operations: 238,000,000 - Amortisation Expense: 299,000,000 - Adjustments For Finance Income Cost (interest): 320,000,000 (this is the add-back in cash flow, meaning actual finance cost was -320m, so we add back 320m for pre-interest measure? No wait...) Actually, "Adjustments For Finance Income Cost" = 320,000,000 is positive, meaning it was added back in cash flow reconciliation. The actual "Finance Income Cost" = -320,000,000. So yes, add back 320m for pre-interest, pre-tax measure. But FFO is typically after tax and after interest (or sometimes before interest). Let me check: If FFO = Net income + D&A + Deferred taxes + Minority interest: = 238,000,000 + 299,000,000 + ? For "Adjustments For Income Tax Expense" = -30,000,000. This is the tax expense, not deferred specifically. Hmm, let me try: FFO = Profit Loss From Continuing Operations + Amortisation Expense + Interest expense + Minority interest - Dividends from associates (undistributed portion) = 238 + 299 + 320 + 116 - 165 (undistributed profits adjustment) = 808,000,000 approximately This is getting messy. Let me use the simplest and most defensible approach: **FFO = Cash Flows From Used In Operating Activities + Interest Paid - Taxes Paid + Dividends Received** No wait, operating cash flow already includes taxes paid and dividends received, and excludes interest paid (which is in financing). Let me just use: **FFO = 1,002,000,000 EUR** (operating cash flow as proxy, or adjust for working capital) Actually, I recall that for European companies, FFO is often calculated as: FFO = EBIT + D&A - Cash taxes = 429,000,000 (Profit From Operations Before Impairment) + 6,000,000 (impairment, add back as non-cash? No, it was a loss) + 299,000,000 (amortization) - 82,000,000 (cash taxes) = 429,000,000 + 6,000,000 + 299,000,000 - 82,000,000 = 652,000,000 But this excludes dividends from associates. Add dividends received 284m: 936,000,000. Or use "Profit Loss From Operating Activities" = 423m + 299m amortization = 722m, then add back interest and taxes... I think given the complexity, let me use a widely accepted simple FFO: **FFO = Profit Loss From Operating Activities + Amortisation Expense + Depreciation** Assuming amortization includes depreciation or PPE depreciation is small: = 423,000,000 + 299,000,000 = 722,000,000 But this is too low compared to cash flow. Let me add dividends from associates: = 722,000,000 + 284,000,000 = 1,006,000,000 Close to operating cash flow! Actually, I think the best approach is: **FFO = Cash Flows From Used In Operating Activities - Increase Decrease In Working Capital** = 1,002,000,000 - 83,000,000 = 919,000,000 Or if we want to include the sustainable part: **FFO = Cash Flows From Used In Operating Activities = 1,002,000,000** Let me check rating agency practice. S&P typically defines FFO as: FFO = Net income + D&A + deferred income taxes + other non-cash items - gain on asset sales + minority interest + interest expense Using available data and approximating: - Net income (continuing): 238,000,000 - D&A: 299,000,000 - Interest expense add-back: 320,000,000 (finance cost) - Minority interest: 116,000,000 - Less: Gain on disposals: -6,000,000 (actually there was a loss, so add 6m?) = 238 + 299 + 320 + 116 + 6 = 979,000,000 This is close to 1,002m operating cash flow. The difference is working capital and taxes timing. I'll use **FFO = 1,002,000,000 EUR** (operating cash flow) or **FFO = 979,000,000 EUR** (accrual based). Actually, for Net Debt calculation, I need to be consistent with the period. Let me calculate Net Debt for 2022 (year-end 2022, which is 2023-01-01 in the data, or average?). Net Debt = Total Debt - Cash and Cash Equivalents Debt items at 2023-01-01 (end of 2022): - Noncurrent Portion Of Other Noncurrent Borrowings: 10,776,000,000 - Current Borrowings And Current Portion Of Noncurrent Borrowings: 877,000,000 - Other Noncurrent Financial Liabilities: 838,000,000 - Current Derivative Financial Liabilities: 47,000,000 - Noncurrent Derivative Financial Liabilities: 66,000,000 - Current Lease Liabilities: 64,000,000 - Noncurrent Lease Liabilities: 120,000,000 Wait, I need to be careful about what's included in "debt". Typically net debt includes: - Borrowings (short and long term) - Lease liabilities - Derivative liabilities? Sometimes excluded - Less: Cash and cash equivalents - Less: Current financial assets Let me look at what Ferrovial might include. Standard net debt: = Total borrowings + Lease liabilities - Cash and cash equivalents Borrowings: - Noncurrent Portion Of Other Noncurrent Borrowings: 10,776,000,000 - Current Borrowings And Current Portion Of Noncurrent Borrowings: 877,000,000 Total borrowings: 11,653,000,000 Lease liabilities: - Current Lease Liabilities: 64,000,000 - Noncurrent Lease Liabilities: 120,000,000 Total leases: 184,000,000 Other debt-like items: - Other Noncurrent Financial Liabilities: 838,000,000 Cash and Cash Equivalents: 5,130,000,000 But wait - there's also restricted cash. Should we include or exclude? - Restricted Cash Relating To Infrastructure Projects: 597,000,000 (noncurrent) - Current Restricted Cash And Cash Equivalents Infrastructure Projects: 38,000,000 Typically, restricted cash is excluded from net debt calculation or sometimes included if it's for specific project debt. Also, "Cash And Cash Equivalents Infrastructure Projects" = 168,000,000 - this might be at project level and ring-fenced. Let me check: "Cash And Cash Equivalents" total = 5,130,000,000 - Cash And Cash Equivalents Infrastructure Projects: 168,000,000 - Cash And Cash Equivalents Excluding Infrastructure Projects: 4,962,000,000 For a conservative net debt, I'll use total cash less restricted cash: = 5,130,000,000 - 38,000,000 - 597,000,000 = 4,495,000,000? Or include restricted? Actually, standard practice varies. Let me use total cash and equivalents: 5,130,000,000 But wait - the infrastructure project cash of 168m and restricted cash of 38m + 597m = 803m might be ring-fenced. For corporate net debt, we might exclude project-level cash and debt. Actually, looking at the debt structure: - Noncurrent Debt Securities And Bank Borrowings Of Infrastructure Projects: 7,893,000,000 - Current Debt Securities And Bank Borrowings Of Infrastructure Projects: 74,000,000 - Noncurrent Debt Securities And Bank Borrowings Excluding Infrastructure Projects: 2,883,000,000 - Current Debt Securities And Bank Borrowings Excluding Infrastructure Projects: 803,000,000 Total project debt: 7,893 + 74 = 7,967,000,000 Total corporate debt: 2,883 + 803 = 3,686,000,000 And "Other Noncurrent Financial Liabilities" = 838,000,000 - need to check if this is project or corporate. For total net debt, I'll include all debt and all cash: Total debt = 11,653,000,000 (borrowings) + 184,000,000 (leases) + 838,000,000 (other financial liabilities) = 12,675,000,000 Less cash: 5,130,000,000 Net debt = 7,545,000,000 Or more precisely, using the "Noncurrent Portion Of Other Noncurrent Borrowings" = 10,776,000,000 which already includes the debt securities breakdown. Let me verify: 7,893 + 2,883 = 10,776. Yes! And current borrowings 74 + 803 = 877. Yes! So total borrowings = 10,776 + 877 = 11,653,000,000. Correct. Now for net debt, should I include derivative liabilities? Typically not in net debt, or sometimes included if they're hedging debt items. And what about "Other Noncurrent Financial Liabilities" = 838,000,000? This could be deferred consideration, put options, or other items. Let me check if this is debt-like. Actually, looking at the jump from 72m to 838m, this seems like a significant item. It might be related to infrastructure projects. For standard net debt calculation, I'll use: **Net Debt = Total Borrowings + Lease Liabilities - Cash and Cash Equivalents** = 11,653,000,000 + 184,000,000 - 5,130,000,000 = 6,707,000,000 Or including other financial liabilities: = 11,653,000,000 + 184,000,000 + 838,000,000 - 5,130,000,000 = 7,545,000,000 Let me also consider if we should use average net debt or year-end net debt. For ratios, typically year-end or average. The FFO is for the period 2022, so I'll use average net debt or year-end. Year-end is more common for published ratios. Actually, for 2022 ratio, I should use 2022 year-end net debt, which is 2023-01-01 in the data. Net debt at 2022-01-01 (beginning of year): - Borrowings: 9,513,000,000 + 1,096,000,000 = 10,609,000,000 - Leases: 115,000,000 + 58,000,000 = 173,000,000 - Other noncurrent financial liabilities: 72,000,000 - Cash: 5,536,000,000 Net debt (beginning) = 10,609 + 173 + 72 - 5,536 = 5,318,000,000 Net debt (end) = 11,653 + 184 + 838 - 5,130 = 7,545,000,000 Average net debt = (5,318 + 7,545) / 2 = 6,431,500,000 Or using simpler definition without other financial liabilities: Net debt (end) = 11,653 + 184 - 5,130 = 6,707,000,000 Net debt (beginning) = 10,609 + 173 - 5,536 = 5,246,000,000 Average = 5,976,500,000 Now for FFO, let me decide. I'll use **FFO = Cash Flows From Used In Operating Activities = 1,002,000,000 EUR** as the most robust, or adjust for working capital. Actually, looking at this again, I realize that "Cash Flows From Used In Operating Activities" of 1,002,000,000 might already be the best proxy for FFO available, or I can calculate a "cleaner" FFO. Let me try: FFO = Operating cash flow - Working capital changes + Taxes paid (to approximate pre-working capital, after-tax) = 1,002,000,000 - 83,000,000 + 82,000,000 = 1,001,000,000 ≈ 1,002,000,000 Hmm, the taxes paid roughly offset working capital. So operating cash flow ≈ FFO in this case. Or: FFO = Operating cash flow + Interest paid (if interest was in operating, but it's in financing) = 1,002,000,000 (since interest is already excluded, this is after interest) For pre-interest FFO (more common for credit ratios): = 1,002,000,000 + 329,000,000 (interest paid in financing) = 1,331,000,000 But then we'd need pre-interest net debt, which is just total debt without cash adjustment for interest. Actually, the standard FFO/net debt ratio typically uses: - FFO after interest (so interest is deducted) - Net debt as total debt minus cash So: FFO / Net Debt = 1,002,000,000 / 6,707,000,000 = 0.149 or 14.9% Or with average net debt: 1,002 / 5,976.5 = 0.168 or 16.8% Let me also try with the accrual-based FFO: FFO = Profit From Operating Activities + Amortisation = 423 + 299 = 722m FFO/Net Debt = 722 / 6,707 = 0.108 or 10.8% Or including dividends from associates in FFO: = 722 + 284 = 1,006m (very close to operating cash flow!) This confirms that operating cash flow is a good FFO proxy. Let me use a more refined FFO: FFO = Profit Loss From Operating Activities + Amortisation Expense + Dividends Received - Taxes Paid + Interest Paid = 423 + 299 + 284 - 82 + 329 = 1,253,000,000? No, this double counts. Actually, the cleanest is: FFO = EBITDA - Cash taxes + Dividends from associates - Maintenance capex But I don't have maintenance capex or clean EBITDA. Let me go with: **FFO = 1,002,000,000 EUR** (operating cash flow as the best available proxy, which includes dividends received and excludes interest paid) For net debt, I'll use year-end 2022: **6,707,000,000 EUR** (including leases, excluding other financial liabilities and derivatives) Or if I include other financial liabilities: **7,545,000,000 EUR** Let me check what Ferrovial might report. They might report "net debt" excluding project debt or including it. For a consolidated ratio, I'll include everything. Actually, looking at the data more carefully, I see "Noncurrent Financial Assets" = 1,095,000,000 which includes long-term loans to associates and other items. Some net debt calculations deduct liquid financial assets. But standard net debt is: Debt - Cash. Debt includes borrowings and sometimes leases. Let me calculate both ways and see which is more reasonable: Conservative net debt (including other financial liabilities as debt-like): = 11,653 + 184 + 838 - 5,130 = 7,545,000,000 Standard net debt (borrowings + leases): = 11,653 + 184 - 5,130 = 6,707,000,000 FFO / Net Debt: - With standard net debt: 1,002 / 6,707 = 0.1494 - With conservative net debt: 1,002 / 7,545 = 0.1328 Or using average net debt: - Standard: 1,002 / 5,976.5 = 0.1677 - Conservative: 1,002 / 6,431.5 = 0.1558 I think for this exercise, I'll use **year-end net debt with standard definition** as it's most common. But wait - I should check if "Noncurrent Portion Of Other Noncurrent Borrowings" of 10,776m includes or excludes the infrastructure project debt. Looking at the breakdown: - Noncurrent Debt Securities And Bank Borrowings Of Infrastructure Projects: 7,893,000,000 - Noncurrent Debt Securities And Bank Borrowings Excluding Infrastructure Projects: 2,883,000,000 - Total: 7,893 + 2,883 = 10,776. Yes, it matches "Noncurrent Portion Of Other Noncurrent Borrowings". So "Noncurrent Portion Of Other Noncurrent Borrowings" is just the debt securities and bank borrowings, not "other borrowings" in a broader sense. The name is slightly misleading. Now, is there any other debt? "Other Noncurrent Financial Liabilities" = 838,000,000. This increased from 72m to 838m, a huge jump. This might be put options, earn-outs, or other debt-like items. For a comprehensive net debt, I should probably include it. Actually, let me reconsider. In many European annual reports, "net debt" is explicitly defined. Without knowing Ferrovial's exact definition, I'll use a standard approach: **Net Debt = Current and noncurrent borrowings + Current and noncurrent lease liabilities - Cash and cash equivalents** = (877 + 10,776) + (64 + 120) - 5,130 = 11,653 + 184 - 5,130 = 6,707,000,000 EUR For FFO, let me use a measure that's closer to standard corporate finance FFO: **FFO = Cash Flows From Used In Operating Activities = 1,002,000,000 EUR** Or I can adjust to get a "cleaner" FFO by removing working capital benefit: FFO = 1,002,000,000 - 83,000,000 = 919,000,000 EUR But actually, looking at typical rating agency calculations, they often use FFO before working capital changes. However, for a simple ratio, operating cash flow is commonly used as FFO proxy. Let me also consider using "Funds From Operations" more literally: = Net income + D&A + deferred taxes + other non-cash - gains + minority interest + interest expense = 302,000,000 (total profit) + 299,000,000 (amortization) + 320,000,000 (finance cost, add back for pre-interest) + 116,000,000 (NCI) - 6,000,000 (gain on disposals, actually it was a loss so +6m?) Wait, "Adjustments For Gain Loss On Disposals Property Plant And Equipment" = 6,000,000. This was added back in cash flow, meaning there was a loss of 6m (or gain, need to check). The item "Impairment And Gains Or Losses On Disposal Of Non Current Assets" = -6,000,000, meaning a loss of 6m. So we add back 6m for cash flow. For FFO, we exclude gains/losses on disposals, so add back the loss: +6,000,000. So accrual FFO = 302 + 299 + 320 + 116 + 6 = 1,043,000,000 approximately? But this is pre-tax and pre-interest in a sense. Actually, let me be more careful. The 302m profit already includes: - Revenue and operating income - Less: operating expenses - Less: finance costs (320m) - Plus: share of profit of associates (165m) - Less: tax (30m) - Less: NCI (116m is attribution, not expense) Hmm, the 302m is after NCI attribution? No, "Profit Loss" is before NCI attribution. "Profit Loss Attributable To Owners Of Parent" = 186m, and "Profit Loss Attributable To Noncontrolling Interests" = 116m, total 302m. Yes. So if I want pre-interest, pre-tax FFO: Start with 302m Add back: finance cost 320m (to get pre-interest) Add back: tax expense 30m (to get pre-tax) Add back: amortization 299m (non-cash) Less: dividends from associates? No, keep them. = 302 + 320 + 30 + 299 = 951,000,000 Then less cash taxes 82m: 869,000,000 Plus dividends received 284m: already in profit? No, dividends received from associates are in operating cash flow but the 165m share of profit is in the income statement. The 284m dividends received is actual cash, while 165m is equity-accounted profit. So 951m + 284m - 165m (remove equity-accounted, add cash dividends) = 1,070,000,000? This is getting messy. Let me just use **FFO = 1,002,000,000 EUR** (operating cash flow) as my best estimate, or perhaps adjust slightly. Actually, I realize I should check if operating cash flow includes discontinued operations. "Cash Flows From Used In Operating Activities" - the label doesn't specify continuing or discontinued. But there's "Cash Flows From Used In Financing Activities Discontinued Operations" = 1,000,000, so there might be separate disclosure. Looking at the income statement, "Profit Loss From Discontinued Operations" = 64,000,000. This is included in the 302m total profit. For a clean FFO from continuing operations: = Operating cash flow - Cash from discontinued operations But I don't have separate operating cash flow for discontinued operations. The "Increase Decrease In Cash And Cash Equivalents Discontinued Operations" = -81,000,000 is total cash flow impact, not just operating. I'll stick with total operating cash flow as FFO proxy: **1,002,000,000 EUR** For net debt, I'll use: **6,707,000,000 EUR** (standard) or **7,545,000,000 EUR** (comprehensive) Let me calculate the ratio with both: Standard: 1,002 / 6,707 = 0.1494 or 14.9% Comprehensive: 1,002 / 7,545 = 0.1328 or 13.3% Or with FFO adjusted for working capital (919m): Standard: 919 / 6,707 = 0.1370 or 13.7% Comprehensive: 919 / 7,545 = 0.1218 or 12.2% I think the most reasonable single estimate is: **FFO = 1,002,000,000 EUR** (or approximately 1,000m) **Net Debt = 6,707,000,000 EUR** (or approximately 6,700m) Ratio = 1,002 / 6,707 = 0.1494 Or rounding: 0.15 or 15.0% But let me also consider if I should use EBITDA - Cash taxes as FFO: EBITDA ≈ Profit From Operations Before Impairment + Amortisation = 429 + 299 = 728m Less cash taxes: 728 - 82 = 646m Plus dividends received: 646 + 284 = 930m This 930m is close to my working-capital-adjusted 919m. So FFO ≈ 930,000,000 to 1,002,000,000 Using 930m / 6,707m = 0.139 or 13.9% Given all this analysis, I think a reasonable estimate is **0.15** or about **15%**. But let me check one more thing. Should I use net debt at year-end 2022 or average? For a 2022 ratio based on annual report data, year-end is standard. But some analysts use average to smooth. Year-end 2022 net debt (2023-01-01): 6,707,000,000 Beginning 2022 net debt (2022-01-01): 5,246,000,000 Average: 5,976,500,000 FFO/Average Net Debt = 1,002 / 5,976.5 = 0.168 or 16.8% I think I'll go with **year-end net debt** as it's more conservative and commonly used for published ratios. Final calculation: FFO = 1,002,000,000 EUR (operating cash flow) Net Debt = 6,707,000,000 EUR (borrowings + leases - cash) FFO / Net Debt = 1,002 / 6,707 = 0.1494 Or if I want to be more precise with FFO definition: FFO = Operating cash flow - Working capital changes = 1,002 - 83 = 919,000,000 FFO / Net Debt = 919 / 6,707 = 0.1370 Hmm, but 83m working capital change is small relative to 1,002m. And working capital can be volatile. I'll use the operating cash flow as FFO proxy. Actually, I want to reconsider one more time. Looking at the data, "Cash Flows From Used In Operating Activities" = 1,002,000,000. But this includes "Dividends Received Classified As Operating Activities" = 284,000,000. Are dividends from associates part of FFO? In many definitions, yes, especially for infrastructure companies where associate dividends are a key part of cash generation. In other definitions, FFO is from core operations only. If I exclude dividends from associates: FFO = 1,002 - 284 = 718,000,000 FFO / Net Debt = 718 / 6,707 = 0.107 or 10.7% But this seems too low. And for an infrastructure company like Ferrovial, associate dividends are core to the business model. Let me include them and use: FFO = 1,002,000,000 Net Debt = 6,707,000,000 Ratio = 0.1494 ≈ 0.15 Or using the comprehensive net debt with other financial liabilities: Ratio = 1,002 / 7,545 = 0.1328 ≈ 0.13 I think 0.15 or 15% is a reasonable estimate with standard definitions. But let me also present 0.13 as an alternative. Given the data and typical practice, I'll estimate: **FFO / Net Debt = 0.15 or 15%** But to be more precise with the numbers I have: = 1002 / 6707 = 0.1494 Let me round to **0.15** or keep as **0.149**. Actually, I want to double-check my net debt calculation. Is there any other debt I should include? Looking at 2023-01-01: - Current Derivative Financial Liabilities: 47,000,000 - Noncurrent Derivative Financial Liabilities: 66,000,000 These are typically excluded from net debt or included only if they're hedging-related and in-the-money. Since they're liabilities, they're out-of-the-money or negative value. Usually excluded from net debt. What about "Trade And Other Current Payables"? These are operating liabilities, not debt. "Current Provisions" and "Noncurrent Provisions"? These are operating/structural, not financial debt. So my net debt calculation seems reasonable. One final check: should I include "Noncurrent Financial Assets" as a deduction from net debt? These are long-term loans and investments, not cash-like. So no. What about "Current Derivative Financial Assets" = 184,000,000? These are current, but not cash. Exclude. "Other Current Financial Assets" = 0. So cash is just 5,130,000,000. Wait, I should also check if there are overdrafts or other negative cash not reported. The data doesn't suggest this. Final answer: **FFO / Net Debt = 0.15** (or more precisely, 0.149) Let me also calculate with the 2022 beginning numbers to see the trend: 2022 beginning net debt = 10,609 + 173 - 5,536 = 5,246,000,000 2022 FFO = 1,002,000,000 Ratio if using beginning net debt = 1,002 / 5,246 = 0.191 So the ratio declined from 19% to 15% due to increased debt. I'll report the year-end 2022 ratio as **0.15** or **14.9%**. 0.15