I need to calculate the FFO / Net debt ratio for 2022. First, let me understand what FFO (Funds From Operations) and Net debt are: - FFO is typically calculated as: Net Income + Depreciation & Amortization + Impairments + Deferred Taxes - Gains on Sales (or more commonly for oil & gas: Cash Flow from Operating Activities - Working Capital Changes, or EBIT + D&A - Taxes) - Net Debt = Total Debt - Cash and Cash Equivalents For FFO, I'll use a standard approach: FFO = Profit/Loss from Operating Activities + Depreciation and Amortization - Taxes paid + Interest expense. Or more commonly in oil & gas: Cash Flow from Operating Activities before working capital changes. Actually, let me use a more standard FFO definition for this industry: FFO = Net Income + D&A + Impairments + Deferred Taxes - Gains/Losses on disposals + Interest Expense (or simply: Operating Cash Flow + Interest Expense - Working Capital Changes) Let me use: FFO = Cash Flow from Operating Activities + Interest Paid (classified as operating) - Increase/Decrease in Working Capital... Actually, the most common approach for FFO in credit analysis is: FFO = Net Income + Depreciation & Amortization + Impairments + Other non-cash items - Gains on asset sales + Interest Expense Or: FFO = Cash Flow from Operating Activities - Changes in Working Capital + Interest Expense Let me calculate using: FFO = Profit Loss From Operating Activities + Depreciation And Amortisation Expense + Impairment Loss Reversal + Write Off Of Tangible And Intangible Assets - Adjustments For Losses Gains On Disposal Of Noncurrent Assets + Interest Expense Actually, let me use a cleaner approach. FFO is often defined as: FFO = Cash Flow from Operating Activities - Increase/Decrease in Working Capital + Interest Expense (if interest was paid in operating activities) From the cash flow statement, I can reconstruct: - Cash Flows From Used In Operating Activities: 17,460,000,000 EUR - Increase Decrease In Working Capital: 1,279,000,000 EUR (this is a positive number, meaning working capital increased, which reduced cash flow) So Operating Cash Flow before working capital changes = 17,460,000,000 + 1,279,000,000 = 18,739,000,000 EUR Or I can use: FFO = Net Income + D&A + Impairments + Other non-cash charges + Interest Expense Let me try: - Profit Loss: 13,961,000,000 EUR - Depreciation And Amortisation Expense: 7,205,000,000 EUR - Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss: 1,140,000,000 EUR - Write Off Of Tangible And Intangible Assets: 599,000,000 EUR - Adjustments For Losses Gains On Disposal Of Noncurrent Assets: -524,000,000 EUR (negative means gain, so subtract) - Interest Expense: Looking at Finance Costs 9,333,000,000 EUR... this includes more than just interest Actually, let me look at "Adjustments For Interest Expense" in cash flow: 1,033,000,000 EUR Let me use the cash flow approach: FFO = Cash Flows From Used In Operating Activities + Increase Decrease In Working Capital (if positive means cash outflow, so add back) + Interest Paid Classified As Operating Activities Wait, let me re-read: "Increase Decrease In Working Capital" 2022-01-01 - 2023-01-01: 1279000000 EUR This is positive. In the cash flow statement, a positive working capital change usually means a decrease in working capital (source of cash) or increase (use of cash). Looking at the components: - Inventories increased: -2,528,000,000 - Trade receivables increased: -1,036,000,000 - Trade payables increased: +2,284,000,000 So working capital increased by 1,279,000,000 means it was a use of cash (negative for CFO). So CFO before WC changes = 17,460,000,000 + 1,279,000,000 = 18,739,000,000 EUR. But wait, let me check: the "Increase Decrease In Working Capital" is shown as positive 1,279,000,000. If I look at the components, the sum is: -2,528 -1,036 + 2,284 + other items = 1,279. Actually, let me use a simpler and more standard FFO calculation: FFO = EBIT + D&A - Cash Taxes Or: FFO = Profit Loss From Operating Activities + D&A + Interest Expense Profit Loss From Operating Activities: 17,510,000,000 EUR Depreciation And Amortisation Expense: 7,205,000,000 EUR But this double counts D&A since operating profit already has D&A deducted. So: FFO = 17,510,000,000 + 7,205,000,000 = wait, no. Operating profit is before D&A? No, operating profit is after D&A. Actually: EBIT = Operating Profit + Interest? No, operating profit is typically EBIT. Let me check: Profit Loss From Operating Activities = 17,510,000,000. This is after D&A (7,205,000,000) and after impairments (1,140,000,000) and after write-offs (599,000,000). So EBITDA = 17,510,000,000 + 7,205,000,000 = 24,715,000,000? No wait, that's if operating profit is before those items. Actually, looking at the P&L structure: - Revenue And Other Income: 133,687,000,000 - Total Purchases Services And Other Costs: 102,529,000,000 - Employee Benefits Expense: 3,015,000,000 - Depreciation And Amortisation Expense: 7,205,000,000 - Impairment Loss Reversal: 1,140,000,000 (positive = income) - Write Off Of Tangible And Intangible Assets: 599,000,000 - Other Operating Income Expense: -1,736,000,000 Let me verify: 133,687 - 102,529 - 3,015 - 7,205 + 1,140 - 599 + (-1,736)? = 17,743? Not matching 17,510. Actually, the "Other Operating Income Expense" is -1,736,000,000 which means expense. Let me try: 133,687 + 1,175 (Other Income) - 102,529 - 3,015 - 7,205 + 1,140 - 599 - 1,736... no wait Revenue And Other Income already includes Other Income. Actually "Revenue And Other Income" = 133,687,000,000 which is Revenue From Contracts With Customers (132,512) + Other Income And Revenues (1,175). So: 133,687 - 102,529 - 3,015 - 7,205 + 1,140 - 599 + (-1,736, wait this is "Other Operating Income Expense" which is negative, meaning expense, so -1,736) = 133,687 - 102,529 = 31,158 31,158 - 3,015 = 28,143 28,143 - 7,205 = 20,938 20,938 + 1,140 = 22,078 (impairment reversal is income) 22,078 - 599 = 21,479 21,479 - 1,736 = 19,743? Hmm, doesn't match 17,510. Let me look at "Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss Trade Receivables": -47,000,000 (negative means reversal, i.e., income). And "Other Operating Income Expense" "Related Parties Member": 3,306,000,000... wait, the main one is -1,736,000,000 and Related Parties is 3,306,000,000? That doesn't sum. Actually, looking more carefully: "Other Operating Income Expense" 2022-01-01 - 2023-01-01: -1736000000 EUR. And "Other Operating Income Expense" "Related Parties Member": 3306000000 EUR. Hmm, these might be separate line items or the Related Parties is a breakdown. Actually, looking at the pattern, when there's a "Related Parties Member", it's usually a subset. But -1,736 + 3,306 = 1,570, not matching. Let me not get bogged down. For FFO, I'll use the standard credit metric: FFO = Cash Flow from Operating Activities + Interest Expense - Working Capital Changes Or more precisely for oil & gas companies, FFO is often: FFO = EBIT + D&A - Cash Taxes + Interest Income/Expense adjustments Let me use a practical approach: FFO = Net Income + D&A + Impairments + Write-offs + Deferred Taxes - Gains on sales + Interest Expense From the data: - Net Income (Profit Loss): 13,961,000,000 - D&A: 7,205,000,000 - Impairment Loss Reversal (expense, positive means loss): 1,140,000,000 - Write Off: 599,000,000 - Adjustments For Losses Gains On Disposal Of Noncurrent Assets: -524,000,000 (negative means gain, so we need to subtract this gain, i.e., add 524,000,000) - Interest Expense (from adjustments): 1,033,000,000 - Income Tax Expense: 8,088,000,000 (but we need to adjust for deferred taxes) Actually, let me look at deferred taxes: Net Deferred Tax Assets increased from 2,713,000,000 to 4,569,000,000, so deferred tax benefit is 1,856,000,000. Or: Cash taxes paid = 8,488,000,000 (from "Income Taxes Paid Refund Classified As Operating Activities") So FFO = 13,961 + 7,205 + 1,140 + 599 + 524 + 1,033 = wait, let me be more careful. Standard FFO = Net Income + Non-cash charges - Non-operating gains + Interest Expense = 13,961 + 7,205 (D&A) + 1,140 (impairment) + 599 (write-off) - (-524) wait, gains are -524, so we add back 524? No, if there's a gain of 524, we subtract it. Actually "Adjustments For Losses Gains On Disposal Of Noncurrent Assets" = -524,000,000. This is an adjustment to reconcile profit to cash flow. Negative means gain (reduces profit, so add back to remove). So in FFO, we want to exclude gains, so if profit already excludes this gain (i.e., gain reduced profit), we add it back? No wait. Let me think differently. FFO should exclude gains/losses on asset sales. If the company had a gain of 524, this increased profit. So to get to FFO, we subtract the gain. But the adjustment is -524, meaning in the cash flow statement, they subtract 524 from profit to get to cash flow (because gain is non-cash or needs to be removed). So profit includes +524 gain, and they subtract it. So FFO = Profit - gain = 13,961 - 524 = 13,437? No, FFO adds back D&A etc. Let me use: FFO = Net Income + D&A + Impairment + Write-offs + Other non-cash - Gain on sales + Interest Expense = 13,961 + 7,205 + 1,140 + 599 - 524 + 1,033 = 23,414 million EUR Hmm, but this seems high. Let me check with another approach. Actually, a more common FFO for credit analysis is: FFO = Cash Flow from Operating Activities before Working Capital Changes + Interest Paid = 17,460 + 1,279 + 851 = 19,590? No wait, Interest Paid is already in CFO. Let me look at CFO components: - Profit before tax: 22,049 - Adjustments: D&A 7,205, impairment 1,140, write-off 599, undistributed profits -1,841, losses/gains -524, dividend income -351, interest income -159, interest expense 1,033, income tax expense 8,088, other adjustments -2,773 - Working capital: 1,279 - Dividends received: 1,545 - Interest received: 116 - Interest paid: -851 - Income taxes paid: -8,488 Sum of adjustments: 7,205 + 1,140 + 599 - 1,841 - 524 - 351 - 159 + 1,033 + 8,088 - 2,773 = 12,417 Profit before tax: 22,049 + Adjustments: 12,417 = 34,466 + Working capital: 1,279... wait, this should be subtracted if it's increase in working capital Actually in indirect method: Start with profit before tax: 22,049 + D&A: 7,205 + Impairment: 1,140 + Write-off: 599 - Undistributed profits of equity investments: -1,841 (this is a negative adjustment, meaning profit included this, so subtract) - Gains on disposal: -524 - Dividend income: -351 - Interest income: -159 + Interest expense: 1,033 + Income tax expense: 8,088 + Other adjustments: -2,773 = 22,049 + 7,205 + 1,140 + 599 - 1,841 - 524 - 351 - 159 + 1,033 + 8,088 - 2,773 = 34,466? Let me calculate: 22,049+7,205=29,254; +1,140=30,394; +599=30,993; -1,841=29,152; -524=28,628; -351=28,277; -159=28,118; +1,033=29,151; +8,088=37,239; -2,773=34,466. Then working capital: -1,279 (increase in working capital, use of cash) = 34,466 - 1,279 = 33,187? But this doesn't match 17,460. Wait, I think I misread. The "Increase Decrease In Working Capital" is 1,279,000,000. But looking at components: - Inventories: -2,528 - Trade receivables: -1,036 - Trade payables: +2,284 - Provisions: +2,028 - Other assets and liabilities: -2,027 - Employee benefits: +39 Sum: -2,528 - 1,036 + 2,284 + 2,028 - 2,027 + 39 = -1,240? Close to -1,279 with rounding. So working capital change is -1,279 (use of cash, negative adjustment). Then: 34,466 - 1,279 = 33,187 + Dividends received: 1,545 = 34,732 + Interest received: 116 = 34,848 - Interest paid: -851 = 33,997 - Income taxes paid: -8,488 = 25,509? Still not 17,460. Hmm. Wait, I think "Profit Loss From Operating Activities" is 17,510, not "Profit Loss Before Tax" is different. Let me re-read. "Profit Loss Before Tax" 2022-01-01 - 2023-01-01: 22049000000 EUR "Profit Loss From Operating Activities" 2022-01-01 - 2023-01-01: 17510000000 EUR So operating activities is 17,510, and before tax is 22,049. The difference is finance income/cost and investment income/expense. Finance Income Cost: -925 Investment Income Expense: 5,464 17,510 - 925 + 5,464 = 22,049? 17,510 - 925 = 16,585; + 5,464 = 22,049. Yes! So operating profit is 17,510. Then finance costs of 925 net and investment income of 5,464 gives 22,049 PBT. For FFO, I should start from a cleaner measure. Let me use: FFO = Cash Flow from Operating Activities + Interest Paid (financing) - Interest Received (financing) + Dividends Received - Working Capital Changes... Actually, standard FFO (Funds From Operations) for credit metrics is: FFO = Net Income + Depreciation & Amortization + Deferred Income Taxes + Other Non-Cash Items - Gains on Asset Sales Or from cash flow: FFO = CFO + Increase in Working Capital (if WC increased, it reduced CFO, so add back) - Interest Paid (if in operating) + Interest Received (if in operating) - Dividends Received Actually, the most standard definition for FFO in corporate credit analysis (Moody's, S&P) is: FFO = Net Income + Depreciation & Amortization + Deferred Income Taxes + Other Non-Cash Items - Gains on Sales of Assets Or equivalently: FFO = Cash Flow from Operations - Changes in Working Capital + Interest Expense (gross) Let me calculate: Net Income: 13,961 + D&A: 7,205 + Deferred Tax change: 4,569 - 2,713 = 1,856 (but this is asset, not expense). Actually "Income Tax Expense" is 8,088, and cash taxes paid are 8,488. So deferred tax benefit = 8,088 - 8,488 = -400? Or looking at balance sheet, Net Deferred Tax Assets increased by 1,856, which means deferred tax benefit of 1,856. Actually, let me check: Net Deferred Tax Assets 2022: 2,713; 2023: 4,569. Increase of 1,856. This could be from acquisitions or operations. The income statement shows "Income Tax Expense" of 8,088. If I use: FFO = 13,961 + 7,205 + 1,140 (impairment) + 599 (write-offs) + 1,033 (interest expense, since it's financing cost but we want pre-interest) - (-524) wait... Actually, a cleaner approach: FFO = EBITDA - Cash Interest - Cash Taxes Or: FFO = EBIT + D&A - Cash Taxes EBIT = Profit Loss From Operating Activities = 17,510? No wait, is operating profit same as EBIT? Usually yes, but let me check if it includes interest. Actually, "Profit Loss From Operating Activities" typically includes operating items only, so it's EBIT. Then "Finance Income Cost" is below the line. So EBIT = 17,510 D&A = 7,205 (already deducted to get EBIT) So EBITDA = 17,510 + 7,205 = 24,715 FFO = EBIT + D&A - Cash Taxes + Interest? No, EBIT is before interest. Wait: EBIT = Earnings Before Interest and Taxes. So if "Profit Loss From Operating Activities" is 17,510, and it doesn't include interest or taxes, then: FFO = EBIT + D&A - Cash Taxes? No, D&A is already added back to get EBIT from EBITDA. Actually: EBITDA - D&A = EBIT. So EBIT + D&A = EBITDA. FFO typically = Net Income + D&A + Deferred Taxes + Other non-cash - Gains + Interest Expense = 13,961 + 7,205 + (8,088 - 8,488) + 1,140 + 599 - (-524) + 1,033? Hmm, let me try: FFO = 13,961 + 7,205 + 1,140 + 599 + 1,033 = 23,938, then adjust for gains/losses and deferred taxes. Actually, let me use the cash flow approach which is cleaner: FFO = CFO - Working Capital Change + Interest Expense (paid, gross) CFO = 17,460 Working capital increased by 1,279 (use of cash, so CFO was reduced by 1,279) So CFO before WC = 17,460 + 1,279 = 18,739 + Interest Paid (operating): 851 + Interest Received (operating): -116? No, we want to exclude this or include? Actually, standard FFO includes interest expense (meaning it's before interest). So if we start from CFO which is after interest paid, we add back interest paid. But wait, is interest paid in CFO or financing? Looking at the data: "Interest Paid Classified As Operating Activities" = 851,000,000. So yes, it's in operating. And "Interest Received Classified As Operating Activities" = 116,000,000. So FFO = CFO + Interest Paid - Interest Received + Dividends Received? No, dividends received are typically excluded or included depending on definition. Actually, for FFO (Funds From Operations), the standard definition is: FFO = Net Income + D&A + Deferred Taxes + Other Non-Cash Items - Gains on Sales Let me calculate this way: Net Income: 13,961 + D&A: 7,205 + Impairment: 1,140 (loss, added back) + Write-off: 599 (non-cash, added back) + Deferred Tax Benefit: let's calculate from BS. Net Deferred Tax Assets increased 1,856. But also Net Deferred Tax Liabilities increased 5094 - 4835 = 259. So net deferred tax position improved by 1,856 - 259? Actually Net Deferred Tax Assets is already net of liabilities. Wait: "Net Deferred Tax Assets" 2022: 2,713; 2023: 4,569. Increase of 1,856. "Net Deferred Tax Liabilities" 2022: 4,835; 2023: 5,094. Increase of 259. These are separate line items, so total deferred tax assets net = 4,569 - 5,094 = -525 in 2023, and 2,713 - 4,835 = -2,122 in 2022. So net deferred tax liability position improved by 1,597. Hmm, this is getting complicated. Let me just use the simple approach: FFO = Cash Flow from Operating Activities + Increase in Working Capital (if positive means use of cash, add back) + Interest Paid - Interest Received = 17,460 + 1,279 + 851 - 116 = 19,474? But this includes dividends received. Actually, FFO typically includes dividends received if they're from operations. But in some definitions, FFO excludes dividends received from investments. Let me try another common definition for oil & gas: FFO = EBIT + D&A - Cash Taxes EBIT = 17,510 D&A = 7,205 (but wait, EBIT already includes D&A deducted, so EBIT + D&A = EBITDA) Actually I want FFO not EBITDA. FFO = EBIT + D&A - Cash Taxes is wrong because that gives EBITDA - Cash Taxes. FFO = Net Income + D&A + Deferred Tax Benefit + Impairments - Gains on Sales + Interest Expense = 13,961 + 7,205 + 1,856 + 1,140 + 599 - 524 + 1,033 = 25,270? Hmm, let me verify the deferred tax. Income tax expense was 8,088, cash taxes paid were 8,488. So the company had 400 more cash taxes than accounting expense, meaning deferred tax liability increased or asset decreased. But balance sheet shows deferred tax assets increased. Actually, the income statement "Income Tax Expense" might not match cash taxes due to deferred tax changes and other items. The difference between tax expense (8,088) and cash taxes paid (8,488) is 400, which could be a deferred tax benefit. But looking at balance sheet: Net Deferred Tax Assets increased from 2,713 to 4,569 = +1,856. This suggests deferred tax benefit. But cash flow shows taxes paid exceed expense by 400. This discrepancy could be from acquisitions, FX, or other items. For simplicity, let me use: FFO = Net Income + D&A + Impairments + Write-offs - Gains + Interest Expense = 13,961 + 7,205 + 1,140 + 599 - 524 + 1,033 = 23,414 Or using cash flow: FFO = CFO before working capital changes + Interest Paid = (17,460 + 1,279) + 851 = 19,590? But this is lower. Wait, I need to check what's in "CFO before working capital changes". The adjustments include interest expense of 1,033, but CFO includes interest paid of 851. The difference might be accrual vs cash. Actually, let me look at this more carefully. "Adjustments For Interest Expense" is 1,033,000,000. This is added back in the indirect method (because it reduced profit but wasn't cash... wait, no, interest expense is added back because it's a financing item, not operating). But then "Interest Paid Classified As Operating Activities" is 851,000,000, which is a cash outflow in operating activities. So in CFO, we have: +1,033 (add back expense) - 851 (cash paid) = net +182? No, the 1,033 is in the adjustments to reconcile profit to operating cash flow, and 851 is a separate cash outflow. Actually in indirect method: Start with PBT: 22,049 + Interest expense: 1,033 (financing cost, added back) - Interest income: -159 (financing income, subtracted) = 22,923 (operating profit before working capital and other items) Then other adjustments: D&A 7,205, impairment 1,140, write-off 599, equity earnings -1,841, gains -524, dividend income -351, other -2,773, taxes 8,088... This is getting messy. Let me just use a standard simplified FFO: FFO = Operating Cash Flow + Interest Expense - Working Capital Changes = 17,460 + 1,033 - 1,279? No, working capital change is already in CFO. Actually: FFO = CFO + Increase in Working Capital + Interest Paid = 17,460 + 1,279 + 851 = 19,590 But wait, if working capital increased by 1,279, that reduced CFO. So CFO before working capital was 18,739. Then add interest paid 851 = 19,590. But interest paid is already in CFO. Hmm, let me think again. CFO includes interest paid as a cash outflow. If we want FFO before interest, we add back interest paid. But in the indirect method, interest expense is added back as a non-cash adjustment (wait, interest expense is non-cash? No, it's accrual). Then interest paid is a cash flow item. Let me trace through: PBT: 22,049 + Interest expense: 1,033 (this is non-operating, so add back to get operating profit before tax) - Interest income: -159 (non-operating, subtract) = 22,923 (operating equivalent) Then + D&A 7,205, + impairment 1,140, + write-off 599, - equity earnings 1,841, - gains 524, - dividend income 351, + other adjustments -2,773, + tax expense 8,088 = 22,923 + 7,205 + 1,140 + 599 - 1,841 - 524 - 351 - 2,773 + 8,088 = 34,466 Then working capital -1,279 = 33,187 Then - taxes paid 8,488 = 24,699 Then + dividends received 1,545 = 26,244 Then + interest received 116 = 26,360 Then - interest paid 851 = 25,509 But reported CFO is 17,460. So I'm way off. Let me check: maybe "Other Adjustments To Reconcile Profit Loss" includes many items. Actually, I think I misread. The "Adjustments For..." items are the detailed breakdown. Let me sum them properly: D&A: 7,205 Impairment: 1,140 Write-off: 599 Undistributed profits: -1,841 Losses/gains on disposal: -524 Dividend income: -351 Interest income: -159 Interest expense: 1,033 Income tax expense: 8,088 Other adjustments: -2,773 Sum: 7,205 + 1,140 + 599 - 1,841 - 524 - 351 - 159 + 1,033 + 8,088 - 2,773 = 12,417 PBT 22,049 + 12,417 = 34,466 Working capital 1,279... but wait, is this positive or negative in the cash flow? Let me check the components: - Inventories: -2,528 (increase, use of cash) - Trade receivables: -1,036 (increase, use of cash) - Trade payables: +2,284 (increase, source of cash) - Provisions: +2,028 (increase, source? or expense?) - Other assets/liabilities: -2,027 - Employee benefits: +39 Sum: -2,528 - 1,036 + 2,284 + 2,028 - 2,027 + 39 = -1,240 Close to -1,279. So working capital change is about -1,279 (use of cash). Then 34,466 - 1,279 = 33,187 + Dividends received 1,545 = 34,732 + Interest received 116 = 34,848 - Interest paid 851 = 33,997 - Income taxes paid 8,488 = 25,509 Still not 17,460. I must be misunderstanding something. Wait! "Profit Loss Before Tax" is 22,049. But the cash flow starts from... let me check if it starts from net income or PBT. Actually, standard indirect method starts from "Profit Loss" (net income), not PBT. Net Income: 13,961 + Tax expense: 8,088 = 22,049 PBT. Yes. But in cash flow, do they start from PBT or net income? Usually net income. Let me try starting from Net Income: Net Income: 13,961 + Tax expense: 8,088 = 22,049 (PBT, but this is added back as non-cash? No, tax expense is added back because we'll subtract cash taxes later) Actually in indirect method: Net Income: 13,961 + Tax expense: 8,088 (added back because it's not cash) = 22,049 + Interest expense: 1,033 - Interest income: -159 = 22,923 + D&A: 7,205 + Impairment: 1,140 + Write-off: 599 - Equity earnings: -1,841 - Gains: -524 - Dividend income: -351 + Other: -2,773 = 34,466 - Working capital: -1,279 = 33,187 + Dividends received: 1,545 + Interest received: 116 - Interest paid: -851 - Taxes paid: -8,488 = 25,509 Still wrong. Unless "Other Adjustments To Reconcile Profit Loss" of -2,773 is actually much larger or includes items I'm missing. Wait, I think I need to re-read. The "Other Adjustments To Reconcile Profit Loss" is -2,773. But maybe there are other items not listed? Let me check if the sum of all adjustments equals the difference between PBT and CFO. Actually, I wonder if "Profit Loss From Operating Activities" is the starting point, not "Profit Loss Before Tax" or "Net Income". Let me check: 17,510 (operating profit) + Finance Income Cost -925 + Investment Income Expense 5,464 = 22,049 PBT. Yes. For cash flow from operations, maybe they start from operating profit, not net income or PBT. Operating profit: 17,510 + D&A: 7,205 + Impairment: 1,140 + Write-off: 599 - Equity earnings: -1,841? No, equity earnings are after operating. - Gains: -524 - Dividend income: -351 - Interest income: -159 + Interest expense: 1,033 + Other: -2,773 = 22,039? Close to 22,049. Hmm, let me try: 17,510 + 7,205 + 1,140 + 599 - 524 - 351 - 159 + 1,033 - 2,773 = 23,170. Not matching. Actually, equity earnings of 1,841 might not be in operating profit. Let me check: "Share Of Profit Loss Of Equity Accounted Investments" = 1,841. This is likely below operating profit. So: Operating profit 17,510 - Finance costs net: 925? Actually Finance Income Cost is -925, meaning net cost of 925. + Investment income: 5,464 = PBT 22,049? 17,510 - 925 + 5,464 = 22,049. Yes! So operating profit is 17,510. Then finance net cost is 925 (meaning finance income - finance costs = -925, so costs exceed income by 925). Then investment income is 5,464. For FFO calculation, let me use a simpler industry approach: FFO = Operating Cash Flow before Working Capital Changes + Interest Expense - Interest Income Operating Cash Flow before WC = CFO + |Working Capital Change if negative| or - |if positive| CFO = 17,460 WC change = -1,279 (increase, use of cash) So CFO before WC = 17,460 + 1,279 = 18,739? No wait, if WC increased by 1,279, CFO was reduced by 1,279. So CFO before WC = 17,460 + 1,279 = 18,739. But this 18,739 includes interest paid of 851 and interest received of 116 and dividends received of 1,545. FFO typically = CFO before WC + Interest Paid - Interest Received - Dividends Received? Or +? Actually, standard FFO includes dividends from operations but excludes those from investments. Interest is typically excluded (FFO is before interest). So FFO before interest = 18,739 + 851 - 116 = 19,474? Or 18,739 + 851 = 19,590 if we exclude interest received. Hmm, but dividends received 1,545 - are these operating or investing? In the cash flow, they're classified as operating activities. But are they part of FFO? Typically FFO excludes dividend income from investments. Let me try: FFO = 18,739 - 1,545 (dividends) + 851 (interest paid) - 116 (interest received) = 17,929? Or: FFO = Net Income + D&A + Impairments + Write-offs - Gains + Interest Expense + Deferred Taxes - Dividend Income = 13,961 + 7,205 + 1,140 + 599 - (-524) + 1,033 + 1,856 - 351... wait, gains were -524 in adjustments, meaning gain of 524. So subtract 524. = 13,961 + 7,205 + 1,140 + 599 - 524 + 1,033 + 1,856 - 351 = 24,919? This is getting too variable. Let me look for a standard definition and stick with it. Moody's defines FFO as: FFO = Net Income + Depreciation & Amortization + Deferred Income Taxes + Other Non-Cash Items - Gains on Asset Sales Using this: Net Income: 13,961 + D&A: 7,205 + Deferred Income Taxes: ? From cash flow, tax expense 8,088 - cash taxes 8,488 = -400. Or from BS, net deferred tax assets increased 1,856. + Other non-cash: impairments 1,140 + write-offs 599 = 1,739 - Gains: -524 (adjustment was -524, meaning gain of 524, so subtract 524) Deferred taxes: If I use the BS approach, increase in deferred tax assets of 1,856 is a benefit. But this might include FX and other items. Let me use cash flow approach: tax expense 8,088 - cash paid 8,488 = -400. This means more cash paid than expense, so deferred tax asset decreased or liability increased. But BS shows opposite. I'll use -400 as conservative. FFO = 13,961 + 7,205 - 400 + 1,140 + 599 - 524 = 21,981 Or if I use the BS deferred tax change: 13,961 + 7,205 + 1,856 + 1,140 + 599 - 524 = 24,237 Let me try yet another approach. S&P defines FFO as: FFO = Funds from operations = Net income + Depreciation & amortization + Deferred income taxes + Other non-cash items = 13,961 + 7,205 + 1,856 + 1,140 + 599 = 24,761 Then subtract gains: 24,761 - 524 = 24,237 Now for Net Debt: Net Debt = Total Debt - Cash and Cash Equivalents Total Debt = Short-term Borrowings + Current Portion of Long-term Borrowings + Long-term Borrowings + Current Lease Liabilities + Noncurrent Lease Liabilities? Or sometimes: Total Debt = Short-term Borrowings + Current Portion of Long-term + Long-term Borrowings + Other debt-like items Let me calculate: Short-term Borrowings: 4,446 Current Portion of Long-term Borrowings: 3,097 Long-term Borrowings: 19,374 Current Lease Liabilities: 884 Noncurrent Lease Liabilities: 4,067 Total Debt = 4,446 + 3,097 + 19,374 + 884 + 4,067 = 31,868? Or excluding leases: 4,446 + 3,097 + 19,374 = 26,917 Cash and Cash Equivalents: 10,155 Net Debt (including leases) = 31,868 - 10,155 = 21,713 Net Debt (excluding leases, standard) = 26,917 - 10,155 = 16,762 Or sometimes "Financial Debt" excludes leases and includes only borrowings: Financial Debt = 4,446 + 3,097 + 19,374 = 26,917 Net Financial Debt = 26,917 - 10,155 = 16,762 But wait, there might be other current financial liabilities. Let me check if there are other debt items. Looking at current liabilities: Short-term Borrowings 4,446, Current Portion of Long-term 3,097, Current Lease Liabilities 884, Trade Payables 25,709, Current Tax 2,108, Other Current 12,473. For debt, typically we include: borrowings, lease liabilities, and sometimes other financial liabilities. Actually, let me check "Other Current Financial Assets" - these are assets, not liabilities. For net debt, standard definition: Net Debt = Total Borrowings (short-term + long-term + current portion) + Lease Liabilities - Cash and Cash Equivalents = 4,446 + 3,097 + 19,374 + 884 + 4,067 - 10,155 = 21,713 Or if we exclude lease liabilities (some analysts do this): = 4,446 + 3,097 + 19,374 - 10,155 = 16,762 Let me check what ENI typically reports. For oil & gas companies, net debt usually includes all interest-bearing debt and finance leases. Actually, looking more carefully, "Current Lease Liabilities" and "Noncurrent Lease Liabilities" are IFRS 16 lease liabilities. These are debt-like but some net debt calculations exclude them. For FFO/Net Debt, let me use: - FFO = 21,981 (from Moody's-like definition with cash flow deferred taxes) or ~24,000 - Net Debt = 16,762 (excluding leases) or 21,713 (including leases) Let me try to find a more precise FFO. Looking at the cash flow statement, a common approach is: FFO = CFO + Net Interest Expense + Tax Shield on Interest - Working Capital Changes Or simply: FFO = Net Income + D&A + Deferred Tax + Non-cash items - Gains Let me use: FFO = 13,961 + 7,205 + 1,140 + 599 + 1,033 - 524 + (8,088 - 8,488) = ? = 13,961 + 7,205 + 1,140 + 599 + 1,033 - 524 - 400 = 23,014 Or with BS deferred tax: 13,961 + 7,205 + 1,140 + 599 + 1,033 - 524 + 1,856 = 25,270 Hmm, the range is 21,981 to 25,270. Let me check if there's a standard "Funds From Operations" in the data. Actually, I notice "Cash Flows From Used In Operating Activities" is 17,460. If I add back interest paid (851) and subtract interest received (116) and dividends received (1,545), I get a measure closer to operating FFO. FFO = 17,460 + 851 - 116 - 1,545 = 16,650? That seems low. Or FFO = 17,460 + 1,279 (working capital) + 851 (interest) - 116 (interest received) = 19,474? Then minus dividends received 1,545 = 17,929. Let me try yet another formula. Some define FFO as: FFO = EBITDA - Cash Interest - Cash Taxes EBITDA = EBIT + D&A = 17,510 + 7,205 = 24,715 Cash Interest = 851 (paid) or 1,033 (expense)? Cash Taxes = 8,488 FFO = 24,715 - 851 - 8,488 = 15,376? Too low. Or using interest expense: 24,715 - 1,033 - 8,488 = 15,194. Hmm, this gives FFO/Net Debt around 0.9x, which seems low for ENI in 2022 (a good year). Let me try: FFO = EBIT + D&A - Taxes + Interest... no. Actually, I think the issue is that "Profit Loss From Operating Activities" (17,510) might already include some items. Let me verify by looking at the comprehensive income or checking if this is EBITDA or EBIT. Wait! In some European presentations, "Operating Profit" or "Profit from Operating Activities" is actually EBIT. And it might include depreciation. So 17,510 is EBIT, not EBITDA. EBITDA = 17,510 + 7,205 = 24,715. For FFO, a common simple formula is: FFO = Net Income + D&A + Deferred Taxes + Other Non-Cash = 13,961 + 7,205 + 1,856 + 1,140 + 599 - 524 = 24,237 Let me use this and calculate FFO/Net Debt. Net Debt: I need to decide on definition. Standard for European oil & gas is to include lease liabilities. Total Debt = 4,446 + 3,097 + 19,374 + 884 + 4,067 = 31,868 Cash = 10,155 Net Debt = 21,713 FFO/Net Debt = 24,237 / 21,713 = 1.12x Or with Net Debt excluding leases: = 26,917 - 10,155 = 16,762 FFO/Net Debt = 24,237 / 16,762 = 1.45x Let me check what ENI might report. Actually, I recall that ENI reports "Net Borrowings" or "Net Financial Debt" which might exclude leases. Looking at the data, there's also "Current Financial Assets At Fair Value Through Profit Or Loss" of 8,251 and "Other Current Financial Assets" of 1,504. Sometimes these are included as "cash-like" items. If I include these as cash-like: Cash-like = 10,155 + 8,251 + 1,504 = 19,910 Net Debt = 31,868 - 19,910 = 11,958 FFO/Net Debt = 24,237 / 11,958 = 2.03x Or with debt excluding leases: 26,917 - 19,910 = 7,007, ratio = 3.46x. Too high. Actually, "Current Financial Assets At Fair Value Through Profit Or Loss" are likely trading securities, not readily available cash. And "Other Current Financial Assets" might include derivatives or other items. Let me stick with standard Cash and Cash Equivalents = 10,155. For FFO, let me try to match with a more standard industry calculation. Looking at ENI's actual reporting, they might use: FFO = Cash Flow from Operating Activities + Changes in Working Capital - Dividends Received + Interest Paid - Interest Received + Income Taxes Paid - Tax Shield on Interest... this gets complicated. Actually, let me use a simpler and more widely accepted definition for this exercise: FFO = Net Income + Depreciation & Amortization + Deferred Income Taxes + Other Non-Cash Items Where Other Non-Cash Items = Impairments + Write-offs - Gains on Sales Deferred Income Taxes = I'll use the cash flow difference: Tax Expense - Cash Taxes = 8,088 - 8,488 = -400 Or I could use the change in net deferred tax position. "Net Deferred Tax Assets" increased 1,856. But "Net Deferred Tax Liabilities" also increased 259. The net change in deferred tax assets minus liabilities = 1,856 - 259 = 1,597. But actually these are separate line items, and the true net position is Assets - Liabilities = 4,569 - 5,094 = -525 in 2023 vs 2,713 - 4,835 = -2,122 in 2022. So net deferred tax liability decreased by 1,597, which is a benefit. I'll use 1,597 as the deferred tax benefit from balance sheet changes. FFO = 13,961 + 7,205 + 1,597 + 1,140 + 599 - 524 = 23,978 Or with the cash flow approach: 13,961 + 7,205 - 400 + 1,140 + 599 - 524 = 21,981 Let me average or pick one. I'll use 23,000 as a rough estimate. Actually, let me look at this from a different angle. The "Cash Flows From Used In Operating Activities" is 17,460. This is actual cash generated from operations. FFO should be higher than this because it excludes working capital changes and includes items before interest. CFO before working capital and interest = 17,460 + 1,279 + 851 - 116 = 19,474? But this includes taxes paid, not tax expense. FFO = 19,474 + 8,488 (taxes paid) - 8,088 (tax expense) = 19,874? No, that's wrong. Actually, FFO is typically after taxes (but before interest). So if I have CFO before WC of 18,739, and I add back interest paid of 851 and subtract interest received of 116, I get 19,474. But this is after taxes (cash taxes paid are in CFO). So FFO = 19,474? And this includes dividends received of 1,545. If I exclude those: 17,929. Hmm. Let me check with: FFO = EBIT + D&A - Cash Taxes = 17,510 + 7,205 - 8,488 = 16,227? No, this is too low because EBIT already has D&A deducted? No wait, EBIT is earnings before interest and taxes, and it's after D&A. So EBIT + D&A = EBITDA = 24,715. Then FFO = EBITDA - Cash Taxes = 24,715 - 8,488 = 16,227? But this doesn't include interest. Actually, FFO should be before interest. So: FFO = EBIT + D&A - Cash Taxes + Interest Expense? No, EBIT is before interest. FFO = EBIT + D&A - Cash Taxes is wrong because EBIT + D&A = EBITDA, and FFO is not EBITDA - Cash Taxes. Let me use: FFO = Net Income + D&A + Deferred Taxes + Non-cash items = 13,961 + 7,205 + 1,597 + 1,140 + 599 - 524 = 23,978 Net Debt = Total Borrowings - Cash = (4,446 + 3,097 + 19,374) - 10,155 = 16,762 FFO/Net Debt = 23,978 / 16,762 = 1.43 Or with leases in debt: 23,978 / 21,713 = 1.10 Let me try to verify with a simpler FFO. Some sources define FFO for oil & gas as simply: FFO = Operating Cash Flow + Increase in Working Capital - Dividends Received + Interest Paid - Interest Received + Income Taxes Paid - Tax Shield... no. Actually, looking at credit rating agencies, a common formula is: FFO = Net Income + D&A + Deferred Taxes + Other Non-Cash - Gains + Interest Expense = 13,961 + 7,205 + 1,597 + 1,140 + 599 - 524 + 1,033 = 25,011 Then FFO/Net Debt = 25,011 / 16,762 = 1.49 or 25,011 / 21,713 = 1.15 Hmm, but this includes interest expense, and net debt is before cash. Actually, for FFO/Net Debt, we want FFO before interest and net debt including all debt. Actually, I realize I should check if there's a standard "Net Financial Debt" or similar in the data. Looking through, I don't see one explicitly. Let me try a different FFO formula that matches cash flow better: FFO = Cash Flow from Operating Activities + Changes in Working Capital + Interest Paid - Interest Received - Dividends Received + Tax Expense - Cash Taxes = 17,460 + 1,279 + 851 - 116 - 1,545 + 8,088 - 8,488 = 17,529? Close to 17,460, makes sense. Or without the tax adjustment: 17,460 + 1,279 + 851 - 116 - 1,545 = 17,929 This 17,929 is CFO before WC changes, interest, and dividends. It's essentially operating cash flow before these items, which is close to FFO. Actually, FFO is usually defined as funds available to pay debt, so it's before interest and dividends. Let me use: FFO = 17,929 (or about 18,000) Then FFO/Net Debt = 18,000 / 16,762 = 1.07 or 18,000 / 21,713 = 0.83 Hmm, this seems low. But wait, I haven't added back the tax accrual vs cash difference. Let me try: FFO = CFO + WC change + Interest Paid - Interest Received - Dividends Received + Deferred Tax Benefit = 17,460 + 1,279 + 851 - 116 - 1,545 + 1,597 = 19,526 Or with -400 instead: 17,460 + 1,279 + 851 - 116 - 1,545 - 400 = 17,529 I think the issue is that dividends received might be part of operating cash flow for oil & gas companies (as part of their business). Let me check if ENI includes dividends from equity investments in operating or investing. "Cash Flows From Losing Control Of Subsidiaries Or Other Businesses Classified As Investing Activities" and "Dividends Received Classified As Operating Activities" - so dividends are in operating. For FFO, dividends received from equity-accounted investments are typically excluded or included depending on whether they're considered operating. In oil & gas, dividends from JVs are often part of normal operations. Let me use a simpler approach and calculate FFO as: FFO = Net Income + D&A + Impairments + Write-offs - Gains + Deferred Taxes = 13,961 + 7,205 + 1,140 + 599 - 524 + 1,597 = 23,978 Net Debt = Short-term borrowings + Current portion long-term + Long-term borrowings - Cash = 4,446 + 3,097 + 19,374 - 10,155 = 16,762 FFO/Net Debt = 23,978 / 16,762 = 1.43 Or if I include lease liabilities in debt: = 4,446 + 3,097 + 19,374 + 884 + 4,067 - 10,155 = 21,713 FFO/Net Debt = 23,978 / 21,713 = 1.10 Let me check which is more standard. For European companies post-IFRS 16, net debt often includes lease liabilities. But "Net Financial Debt" or "Net Borrowings" might exclude them. Actually, looking at the data structure, there are separate lines for borrowings and lease liabilities, suggesting they might be reported separately. For a conservative estimate, let me use Net Debt excluding leases: 16,762. And for FFO, let me use a more cash-flow based measure: FFO = Operating Cash Flow + Changes in Working Capital - Dividends Received + Interest Paid - Interest Received + Tax Expense - Cash Taxes + D&A... no this double counts. Let me just use: FFO = CFO before WC changes + Interest Paid - Interest Received = (17,460 + 1,279) + 851 - 116 = 19,474 But this is after tax (cash taxes). FFO is typically after tax. So 19,474 is after cash taxes, interest, etc. But we added back interest, so it's before interest but after taxes. Actually, FFO should be after taxes. So 19,474 is a reasonable FFO measure (before interest, after taxes, excluding working capital and dividends). But wait, I subtracted interest received. Should I? Interest received is income, so if we want FFO before interest, we should exclude both interest paid and received. FFO = 18,739 + 851 - 116 = 19,474? Or 18,739 (before interest movements)? Actually, let me think of it as: CFO before WC is 18,739. This includes: - Operating profit adjustments - Dividends received: 1,545 - Interest received: 116 - Interest paid: -851 - Taxes paid: -8,488 So 18,739 = Operating profit source + 1,545 + 116 - 851 - 8,488 = Operating profit source - 7,678 Operating profit source = 18,739 + 7,678 = 26,417? This should be roughly PBT + D&A + other non-cash = 22,049 + 7,205 + ... = 29,254 + other items. Hmm, not matching. Actually, the "operating profit source" in cash flow terms is: PBT + D&A + impairments + write-offs - equity earnings - gains + other - working capital changes... Let me just accept that FFO is approximately 20,000-24,000 and calculate ratios. For a reasonable single estimate, let me use: FFO = Net Income + D&A + Deferred Tax (BS) + Impairments + Write-offs - Gains = 13,961 + 7,205 + 1,597 + 1,140 + 599 - 524 = 23,978 Net Debt = 16,762 (excluding leases) or 21,713 (including leases) I'll go with Net Debt including leases as it's more comprehensive post-IFRS 16: FFO/Net Debt = 23,978 / 21,713 = 1.10 Or if I use the cash flow based FFO = 19,474 and net debt = 21,713: 0.90 Or FFO = 19,474 and net debt excluding leases = 16,762: 1.16 Let me try to find a more precise answer by looking at what similar companies report. For integrated oil & gas in 2022, FFO/Net Debt was typically around 0.8-1.5x depending on the company and leverage. Given ENI's strong 2022 results (high oil prices), let me estimate FFO/Net Debt around 1.0-1.2x. Let me recalculate with a cleaner FFO: FFO = Cash Flow from Operating Activities + Increase in Working Capital + Interest Paid - Interest Received = 17,460 + 1,279 + 851 - 116 = 19,474 Net Debt (including leases) = 4,446 + 3,097 + 19,374 + 884 + 4,067 - 10,155 = 21,713 Ratio = 19,474 / 21,713 = 0.90 Or with Net Debt excluding leases = 16,762: Ratio = 19,474 / 16,762 = 1.16 Hmm, these are quite different. Let me check if "Current Lease Liabilities" and "Noncurrent Lease Liabilities" should be included. In standard credit analysis post-IFRS 16, lease liabilities are included in debt. So 21,713 is correct. But wait - I should check if there are other debt-like items. "Other Current Financial Assets" are assets. What about "Other Noncurrent Financial Assets"? These are assets. Are there other liabilities that are debt-like? "Other Longterm Provisions" 15,267 - these are provisions, not debt. "Other Noncurrent Liabilities" 3,234 - might include some debt-like items, but likely mostly provisions and other non-debt. Let me check if there's "Other Current Liabilities" that includes debt. 12,473 - likely includes accrued expenses, not debt. So my debt calculation seems reasonable. For FFO, let me also consider: should I add back dividends received? In oil & gas, dividends from JVs are often a normal part of operations. If I include them: FFO = 19,474 + 1,545 = 20, (wait, I already had dividends in CFO, so when I add back WC changes, dividends are still in there). Actually, let me recalculate: CFO 17,460 includes: - Operating source: ~26,000 (after adjustments, before WC, interest, dividends, taxes) - WC: -1,279 - Dividends: +1,545 - Interest received: +116 - Interest paid: -851 - Taxes paid: -8,488 So 17,460 = Operating source - 1,279 + 1,545 + 116 - 851 - 8,488 Operating source = 17,460 + 1,279 - 1,545 - 116 + 851 + 8,488 = 26,417 FFO (before interest, after taxes, excluding dividends?) = Operating source - taxes paid? No, operating source already includes tax expense adjustments. Actually, FFO = Operating source - Dividends received + Interest paid - Interest received? I'm overcomplicating this. Let me use a standard formula from a reputable source. Moody's FFO for non-financial corporates: FFO = Net income + Depreciation & amortization + Deferred income taxes + Other non-cash items - Gain on asset sales + Interest expense = 13,961 + 7,205 + 1,597 + 1,140 + 599 - 524 + 1,033 = 25,011 Wait, I need to check if interest expense should be added. Moody's FFO is typically after interest expense (since it's funds from operations, not funds before interest). Actually, no - FFO is usually before interest because it's meant to cover interest payments. Let me verify: FFO / Debt is a coverage ratio. If FFO is after interest, then FFO/Debt measures ability to pay principal from post-interest cash. If before interest, it measures ability to pay total debt service. For "FFO / Net Debt", it's typically a leverage ratio, and FFO is usually before interest (otherwise it double penalizes for interest). Actually, looking at Moody's definitions more carefully: - FFO = Net income + D&A + Deferred taxes + Other non-cash items - This is AFTER interest expense - FFO interest coverage = FFO / Gross Interest - FFO / Debt = FFO / Total Debt So FFO is after interest! Then for FFO/Net Debt, we use FFO after interest. Moody's FFO = 13,961 + 7,205 + 1,597 + 1,140 + 599 - 524 = 23,978 Then FFO/Net Debt = 23,978 / 21,713 = 1.10 Or if we use net debt excluding leases: 23,978 / 16,762 = 1.43 Let me check S&P's definition. S&P uses "Funds From Operations" similarly but sometimes includes working capital changes. Actually, for this exercise, I think the most reasonable single number is around 1.0-1.2. Let me try one more calculation using a different FFO approach: FFO = EBITDA - Cash Taxes = 24,715 - 8,488 = 16,227? But this is before interest, and FFO should be after interest. FFO = EBIT + D&A - Cash Taxes - Interest Expense? No, that double counts. FFO = Net Income + D&A + Deferred Taxes + Non-cash items = 13,961 + 7,205 + 1,597 + 1,739 - 524 = 23,978 This is consistent. I'll use this. For Net Debt, I'll include leases: Short-term borrowings: 4,446 Current portion long-term: 3,097 Long-term borrowings: 19,374 Current lease liabilities: 884 Noncurrent lease liabilities: 4,067 Total debt: 31,868 Less cash: 10,155 Net debt: 21,713 FFO/Net Debt = 23,978 / 21,713 = 1.10 But let me also consider: should I include "Current Financial Assets" as cash-like? These are 8,251 + 1,504 = 9,755, which is almost as much as cash. If these are liquid investments, they should be included. Adjusted Cash = 10,155 + 8,251 + 1,504 = 19,910 Net Debt = 31,868 - 19,910 = 11,958 FFO/Net Debt = 23,978 / 11,958 = 2.01 Hmm, this is quite different. "Current Financial Assets At Fair Value Through Profit Or Loss" are likely trading securities or derivatives, not necessarily available cash. "Other Current Financial Assets" might include receivables from financing. For conservative analysis, I'll stick with Cash and Cash Equivalents only. Let me also verify my FFO calculation once more. The "Other Adjustments To Reconcile Profit Loss" is -2,773. This might include items I should add back. Moody's FFO = Net income + D&A + Deferred taxes + Other non-cash items Other non-cash items could include: - Impairments: 1,140 - Write-offs: 599 - Other adjustments: -2,773 (negative, so maybe not add) Actually, the -2,773 might include working capital related items or other non-cash adjustments. Without more detail, I'll include impairments and write-offs as clear non-cash items. FFO = 13,961 + 7,205 + 1,597 + 1,140 + 599 - 524 = 23,978 Let me round to 24,000 and Net Debt to 22,000 for a ratio of about 1.09. Or if I use the more standard "Net Borrowings" excluding leases: Net Debt = 26,917 - 10,155 = 16,762 FFO/Net Debt = 23,978 / 16,762 = 1.43 Given the wide range, let me think about which is most commonly used. For European oil & gas companies, "Net Debt" or "Net Financial Debt" typically includes finance leases but excludes operating leases (though post-IFRS 16, all leases are capitalized). Actually, looking at ENI's reporting, they might use "Net Borrowings" which includes: - Short-term borrowings - Current portion of long-term borrowings - Long-term borrowings - Less cash and cash equivalents And separately report lease liabilities. So Net Borrowings = 4,446 + 3,097 + 19,374 - 10,155 = 16,762 FFO / Net Borrowings = 23,978 / 16,762 = 1.43 But the question asks for "FFO / Net debt ratio", not "Net Borrowings". In common parlance, "Net Debt" includes all interest-bearing liabilities minus cash. Lease liabilities are interest-bearing (they include an interest component). So 21,713 is more appropriate. However, many practitioners and some rating agencies calculate "Net Debt" excluding lease liabilities for comparability with pre-IFRS 16 periods. Given this ambiguity, let me provide a reasonable estimate. I'll use: - FFO = 24,000 (approximate) - Net Debt = 22,000 (including leases) Ratio = 24,000 / 22,000 = 1.09, or about 1.1. Let me try to be more precise with FFO. I'll use the cash flow based approach which is more transparent: FFO = Cash Flow from Operating Activities + Increase in Working Capital + Interest Paid - Interest Received = 17,460 + 1,279 + 851 - 116 = 19,474 But this FFO is lower than the accrual-based one. The difference is mainly deferred taxes and other non-cash items. Accrual FFO = 23,978 Cash FFO = 19,474 The difference (4,504) is roughly: Deferred tax 1,597 + Other non-cash in adjustments 2,773 + some other items. For credit analysis, accrual-based FFO is more common because it smooths out timing differences. I'll use FFO = 24,000 and Net Debt = 22,000, giving ratio ≈ 1.09. Or with more precise numbers: 23,978 / 21,713 = 1.104. Let me also try: FFO = 19,474 (cash-based) / 21,713 = 0.90. Given that 2022 was a strong year for oil & gas and ENI's credit metrics improved significantly, a ratio around 1.0-1.1 seems more plausible than 0.9. Actually, let me verify by looking at ENI's actual credit ratings. In 2022, ENI was rated BBB+ by S&P and Baa1 by Moody's with stable outlooks, suggesting solid but not spectacular credit metrics. FFO/Net Debt around 1.0x would be consistent with these ratings. Let me finalize with: FFO = 23,978 (Net Income 13,961 + D&A 7,205 + Deferred Tax 1,597 + Impairments 1,140 + Write-offs 599 - Gains 524) Net Debt = 21,713 (Total Debt 31,868 - Cash 10,155) FFO/Net Debt = 23,978 / 21,713 = 1.104 Rounding to reasonable precision: 1.10 or 1.1. Actually, let me reconsider the deferred tax. Using cash flow difference (tax expense - cash taxes = 8,088 - 8,488 = -400) instead of BS change: FFO = 13,961 + 7,205 - 400 + 1,140 + 599 - 524 = 21,981 FFO/Net Debt = 21,981 / 21,713 = 1.01 Or with -400 and excluding leases: 21,981 / 16,762 = 1.31. The BS-based deferred tax gives 1.10, cash flow based gives 1.01. I'll use the BS-based as it's more common in FFO calculations. Final answer: FFO/Net Debt ≈ 1.1 But let me also check if I should use "Cash And Cash Equivalents If Different From Statement Of Financial Position" which is 10,181 vs 10,155. The difference is small (26). I'll use 10,155 as it's the main line item. Actually wait - "Cash And Cash Equivalents" is 10,155 and "Cash And Cash Equivalents If Different From Statement Of Financial Position" is 10,181. The latter might include restricted cash or other adjustments. I'll use 10,155. Let me also verify my debt calculation: Short-term Borrowings: 4,446 Current Portion of Long-term Borrowings: 3,097 Long-term Borrowings: 19,374 Current Lease Liabilities: 884 Noncurrent Lease Liabilities: 4,067 Total: 31,868 Is there any other debt? "Other Noncurrent Financial Assets" are assets. "Other Noncurrent Liabilities" 3,234 - might include pension liabilities, provisions, etc., not typically debt. "Trade And Other Current Payables" are operating payables, not debt. So 31,868 seems correct for total debt-like liabilities. Net Debt = 31,868 - 10,155 = 21,713 FFO = 23,978 Ratio = 23,978 / 21,713 = 1.1043... I'll round to 1.10 or provide 1.1. Actually, looking at the precision of my inputs, I should provide 1.10. But let me also consider: should FFO include the full tax expense or cash taxes? Moody's FFO uses deferred tax add-back, which is based on the income statement tax expense vs cash taxes. The BS change might include FX and other items. If I use the more conservative cash-based FFO = 19,474: Ratio = 19,474 / 21,713 = 0.90 Or if I add back dividends received (which are part of normal operations for oil & gas): FFO = 19,474 + 1,545 = 21,019 Ratio = 21,019 / 21,713 = 0.97 Hmm, this is close to 1.0. Given the various approaches, I think a ratio around 1.0-1.1 is reasonable. Let me settle on 1.0 as a conservative estimate, or 1.1 if using accrual-based FFO. Actually, re-reading my FFO calculation: I used BS deferred tax change of 1,597. But this includes the increase in deferred tax liabilities of 259. If I look at "Net Deferred Tax Assets" only, it increased 1,856. The "Net Deferred Tax Liabilities" increased 259. The total deferred tax benefit would be: increase in DTA - increase in DTL = 1,856 - 259 = 1,597. Or if these are gross changes, the net benefit is 1,597. But wait - are DTA and DTL separate or is "Net Deferred Tax Assets" already net? The naming suggests "Net" means after offsetting. So "Net Deferred Tax Assets" of 4,569 means DTA - DTL = 4,569. And "Net Deferred Tax Liabilities" of 5,094 means DTL - DTA = 5,094? That can't both be true. Actually, these are likely separate items that can't be offset due to jurisdiction or entity differences. So total deferred tax position = DTA of 4,569 in some entities - DTL of 5,094 in other entities = net liability of 525. Change from 2022: DTA 2,713 - DTL 4,835 = net liability 2,122. To 2023: DTA 4,569 - DTL 5,094 = net liability 525. Improvement of 1,597 = deferred tax benefit. This makes sense. So my calculation is correct. Final calculation: FFO = 13,961 + 7,205 + 1,597 + 1,140 + 599 - 524 = 23,978 Net Debt = 31,868 - 10,155 = 21,713 FFO/Net Debt = 23,978 / 21,713 = 1.104 I'll provide 1.10 as my answer. 1.10