I need to calculate the FFO / Net debt ratio for 2022. First, let me understand what FFO (Funds From Operations) and Net debt mean: - FFO is typically calculated as: Net Income + Depreciation & Amortization + Deferred Taxes + Other non-cash items. A common simplified approach is: EBITDA - Interest Paid - Taxes Paid + Interest Income (or more commonly just Cash Flow from Operations before working capital changes, or EBITDA - Interest - Taxes) - Net Debt = Total Debt - Cash and Cash Equivalents Let me first calculate Net Debt for 2022 (which is at 2023-01-01, i.e., end of 2022): **Total Debt (Financial Liabilities):** - Noncurrent Financial Liabilities 2023-01-01: 13,999,000,000 EUR - Current Financial Liabilities 2023-01-01: 2,302,000,000 EUR - Total Debt = 13,999,000,000 + 2,302,000,000 = 16,301,000,000 EUR **Cash and Cash Equivalents 2023-01-01:** 3,985,000,000 EUR **Net Debt = 16,301,000,000 - 3,985,000,000 = 12,316,000,000 EUR** Now for FFO. A standard definition of FFO used by credit rating agencies is: FFO = Net Income + Depreciation & Amortization + Deferred Income Tax + Other non-cash items Or more practically from cash flow: FFO = Cash Flow from Operating Activities before working capital changes + Interest Paid From the data, I can calculate FFO as: - EBITDA 2022-01-01 to 2023-01-01: 4,954,000,000 EUR - Less: Interest Paid: 520,000,000 EUR (but this is classified as operating, so it's already in CFO) - Less: Taxes Paid: 762,000,000 EUR Actually, let me use a more standard approach. FFO is typically: FFO = Profit/Loss from Operating Activities + Depreciation & Amortization - Interest Paid (if not already) + ... Actually, the most common definition for FFO in credit analysis is: **FFO = Net Income + Depreciation & Amortization + Deferred Tax + Other non-cash items** Or from cash flow statement: **FFO = Cash Flow from Operating Activities + Interest Paid - Interest Received (or just + Interest Paid for gross FFO)** Let me use: FFO = EBITDA - Interest Paid - Cash Taxes + Interest Received (approximation) Actually, a cleaner approach using the data: - Cash Flows from Operating Activities 2022-01-01 to 2023-01-01: 4,242,000,000 EUR - This includes: Interest Paid (520M), Interest Received (87M), Dividends Received (106M), Income Taxes Paid (762M) Gross FFO = CFO + Interest Paid - Interest Received + ... Actually, standard FFO definition by S&P: FFO = Funds from operations = Net income from continuing operations + Depreciation and amortization + Deferred income taxes + Other non-cash items From the data: - Profit/Loss 2022-01-01 to 2023-01-01: 1,826,000,000 EUR - Adjustments for Depreciation and Amortization: 1,532,000,000 EUR - Other adjustments to reconcile profit/loss: 1,525,000,000 EUR But let me check: Adjustments for Reconcile Profit Loss = 3,057,000,000 EUR This includes: - Depreciation and Amortization: 1,532,000,000 EUR - Other adjustments: 1,525,000,000 EUR So CFO = Profit/Loss + Adjustments + Change in Working Capital + Other items = 1,826,000,000 + 3,057,000,000 + (-272,000,000) + (-1,089,000,000) + ... Wait, let me verify: CFO = 4,242,000,000 EUR The standard FFO (as used by rating agencies) is often approximated as: **FFO = CFO + Interest Paid - Interest Received (if interest received is not part of operations)** Or more precisely for this context, let me use: **FFO = EBITDA - Cash Interest - Cash Taxes** But actually, the most common and practical definition is: **FFO = Net Income + Non-cash charges (D&A, deferred taxes, etc.)** From the P&L: - Profit/Loss: 1,826,000,000 - Amortizacion Y Perdidas Por Deterioro De Activos (D&A and impairment): 1,532,000,000 - Increase/Decrease in Allowance for Credit Losses: -228,000,000 (this is a reversal, so subtract) - Other Gains/Losses: -111,000,000 But this gets complicated. Let me use a simpler standard approach: **FFO = EBITDA - Interest Paid - Income Taxes Paid + Interest Received** = 4,954,000,000 - 520,000,000 - 762,000,000 + 87,000,000 = 4,954,000,000 - 1,195,000,000 = 3,759,000,000 EUR Wait, but this might double count. Let me check another common definition: **FFO = Cash Flow from Operating Activities + Interest Paid - Interest Received** = 4,242,000,000 + 520,000,000 - 87,000,000 = 4,675,000,000 EUR Or if we use the more standard "Gross FFO" (before interest): = 4,242,000,000 + 520,000,000 = 4,762,000,000 EUR (approx) Actually, looking at rating agency standards, FFO typically includes: - Net income - D&A - Deferred taxes - Other non-cash items From the cash flow reconciliation: - Profit/Loss: 1,826,000,000 - Adjustments (total): 3,057,000,000 - D&A and impairment: 1,532,000,000 - Other adjustments: 1,525,000,000 But we need to be careful. The "Other adjustments" of 1,525,000,000 likely includes working capital and other items. Let me look at this differently. The standard formula from the cash flow statement: CFO = Net Income + Adjustments + Changes in Working Capital + Other operating cash flows From data: - Net Income: 1,826,000,000 - Adjustments for Reconcile Profit Loss: 3,057,000,000 - D&A: 1,532,000,000 - Other adjustments: 1,525,000,000 - Increase/Decrease in Working Capital: -272,000,000 - Other Inflows/Outflows of Cash classified as Operating: -1,089,000,000 - Interest Paid: 520,000,000 - Interest Received: 87,000,000 - Dividends Received: 106,000,000 - Income Taxes Paid: 762,000,000 Let me verify: 1,826 + 3,057 - 272 - 1,089 + 520 + 87 + 106 - 762 = 4,573... Hmm, that doesn't equal 4,242. Actually, looking more carefully, the "Adjustments For Reconcile Profit Loss" of 3,057M likely already includes some items. Let me just use the reported CFO and add back interest for a standard FFO measure. Standard FFO (as per Moody's/S&P for utilities): **FFO = Net Income + D&A + Deferred Taxes + Other non-cash items** Or from CFO: **FFO = CFO + Interest Expense (or Interest Paid)** Using: FFO = CFO + Interest Paid = 4,242,000,000 + 520,000,000 = 4,762,000,000 EUR But some definitions use: FFO = EBITDA - Cash Interest - Cash Taxes = 4,954,000,000 - 520,000,000 - 762,000,000 = 3,672,000,000 EUR Hmm, these are quite different. Let me think about which is more standard for "FFO/Net Debt" ratio. In credit analysis, FFO is typically defined as: **FFO = Net income + Depreciation & Amortization + Deferred income taxes + Other non-cash items** From the data, I can calculate this as: - Net Income: 1,826,000,000 - D&A and impairment: 1,532,000,000 - We need deferred taxes and other non-cash items From the balance sheet, change in Deferred Tax Assets: 2,267M - 2,210M = decrease of 57M (meaning cash benefit or... actually decrease in DTA means used or reversed) Change in Deferred Tax Liabilities: 1,951M - 1,787M = increase of 164M Net deferred tax change = 164M - (-57M) = ... this is getting complex. Let me use a simpler approach. The most widely accepted FFO for the FFO/Net Debt ratio in European utilities is: **FFO = EBITDA - Net Interest Paid - Cash Taxes** Or: **FFO = CFO + Interest Paid - Interest Received** (if we want gross FFO) Actually, looking at standard credit metrics, I'll use: **FFO = Profit/Loss + D&A + Other non-cash adjustments (excluding working capital)** From cash flow, "Adjustments For Reconcile Profit Loss" = 3,057,000,000 This includes D&A (1,532M) and other adjustments (1,525M). If we assume "Other adjustments" includes deferred taxes and other non-cash items: FFO = 1,826,000,000 + 3,057,000,000 = 4,883,000,000 EUR But this is close to CFO + working capital changes. Actually: CFO = Net Income + Adjustments - Working Capital changes - Other items + Interest/dividends/taxes Let me try: FFO = Net Income + Total Adjustments = 1,826 + 3,057 = 4,883M Or more precisely, using the standard definition from Moody's for FFO: FFO = Net Income + Depreciation & Amortization + Deferred Income Taxes + Other Non-Cash Items + Non-recurring items I'll use a practical approach: **FFO ≈ CFO + Interest Paid** (since CFO is after interest paid in this classification) = 4,242,000,000 + 520,000,000 = 4,762,000,000 EUR But wait - is interest paid already in CFO? Looking at the cash flow items, "Interest Paid Classified As Operating Activities" is listed separately, suggesting it might be part of the reconciliation. Actually in many statements, interest paid is shown as a separate line but is part of CFO. Let me recalculate using a cleaner FFO definition: **FFO = EBITDA - Cash Interest - Cash Taxes + Interest Received** Actually no, EBITDA is before interest and taxes. So: FFO = EBITDA - Interest Paid - Income Taxes Paid + Interest Received + Dividends Received (if part of operations) = 4,954,000,000 - 520,000,000 - 762,000,000 + 87,000,000 + 106,000,000 = 4,954,000,000 - 1,089,000,000 = 3,865,000,000 EUR Hmm, but this seems low. Let me check: 4,954 - 520 - 762 + 87 + 106 = 3,865. Yes. But standard FFO should be closer to operating cash generation before working capital. Let me use another common definition: **FFO = Net Income + D&A + Deferred Taxes + Other non-cash items** = 1,826,000,000 + 1,532,000,000 + (change in deferred taxes) + other items Change in Deferred Tax Liabilities: 1,951 - 1,787 = 164M increase (positive for FFO) Change in Deferred Tax Assets: 2,210 - 2,267 = -57M decrease (if DTA decreased, this could mean utilization, which is negative for FFO or...) Actually, the change in net deferred tax position = (1,951 - 1,787) - (2,210 - 2,267) = 164 - (-57) = 221M... wait, this doesn't match the income tax expense. Income Tax Expense in P&L: 697M Income Taxes Paid: 762M So deferred tax change = 697 - 762 = -65M (deferred tax liability decreased or asset increased) Actually, let me just use the most standard practical formula: **FFO = CFO + Interest Paid - Interest Received** (for Gross FFO, or just + Interest Paid for a simpler version) = 4,242,000,000 + 520,000,000 - 87,000,000 = 4,675,000,000 EUR Or if Interest Received is considered part of operations: = 4,242,000,000 + 520,000,000 = 4,762,000,000 EUR I'll use **FFO = 4,675,000,000 EUR** (CFO + Interest Paid - Interest Received) as a standard measure, or perhaps simpler just use CFO + Interest Paid. Actually, looking at this more carefully for utility companies, a very common definition is: **FFO = Funds from Operations = Net Income + D&A + Deferred Taxes + Other non-cash items - Gain on asset sales** From the data: - Net Income: 1,826,000,000 - D&A and impairment: 1,532,000,000 - Other adjustments: 1,525,000,000 (but this includes working capital and other items) Hmm, the "Other Adjustments To Reconcile Profit Loss" of 1,525M is quite large. Let me see what this might include. Actually, I think the cleanest approach given the data is: **FFO = EBITDA - Interest expense (accrual) - Income tax expense (accrual) ± other non-cash items** But we don't have accrual interest expense directly. We have Finance Costs of 837M and Finance Income of 164M. Let me try yet another approach. The standard FFO used by S&P for the FFO/Debt ratio is: **FFO = Net Income + Depreciation & Amortization + Deferred Income Taxes + Other Non-Cash Items** Where "Other Non-Cash Items" includes things like provision changes, asset write-downs, etc. From our data: - Net Income: 1,826,000,000 - D&A: 1,532,000,000 - Increase/Decrease in Allowance for Credit Losses: -228,000,000 (this is a reversal, negative) - Other Gains/Losses: -111,000,000 (negative) For deferred taxes: Income Tax Expense 697M, but Taxes Paid 762M, so deferred tax benefit = 697 - 762 = -65M (actually this means more taxes paid than expensed, so deferred tax asset increase or liability decrease) Actually: If Tax Expense < Taxes Paid, then Deferred Tax Liability decreased or DTA increased, which is a use of cash but non-cash in prior period. For FFO, we add back the deferred tax portion. Deferred tax portion = Tax Expense - Taxes Paid = 697 - 762 = -65M. This means we actually had a deferred tax benefit of -65M, or we utilized deferred taxes. Hmm, this is getting complicated. Let me use a much simpler and more standard approach: **FFO ≈ Cash Flow from Operating Activities before Working Capital Changes** From the cash flow: - Start with Profit/Loss: 1,826,000,000 - Add Adjustments for Reconcile Profit Loss: 3,057,000,000 - This includes D&A (1,532M) and Other adjustments (1,525M) If "Other adjustments" are all non-cash: FFO = 1,826,000,000 + 3,057,000,000 = 4,883,000,000 EUR Then we subtract working capital and other cash items to get CFO. Actually, this makes sense! FFO is essentially "CFO before working capital changes and before other operating cash flows": FFO = Net Income + Non-cash adjustments = 1,826 + 3,057 = 4,883M Or more precisely, if we look at the structure: CFO = Net Income + Adjustments - Working Capital changes + Other operating cash flows (interest, dividends, taxes) Wait, the signs are: - Increase/Decrease In Working Capital: -272,000,000 (negative means working capital increased, using cash) - Other Inflows Outflows Of Cash Classified As Operating Activities: -1,089,000,000 - Interest Paid: 520,000,000 (positive? or is this an outflow shown as positive?) - Interest Received: 87,000,000 - Dividends Received: 106,000,000 - Income Taxes Paid: 762,000,000 Hmm, the signs are confusing. In standard cash flow statements, outflows are negative. But here they seem to be showing amounts. Let me assume the "Interest Paid" of 520M is a positive number representing outflow, so in calculation it would be -520M. Let me verify CFO: Net Income: 1,826 + Adjustments: 3,057 + Working Capital: -272 (increase in WC, so subtract) + Other operating: -1,089 + Interest Paid: -520 + Interest Received: +87 + Dividends Received: +106 - Income Taxes Paid: -762 = 1,826 + 3,057 - 272 - 1,089 - 520 + 87 + 106 - 762 = 4,883 - 272 - 1,089 - 520 + 87 + 106 - 762 = 4,883 - 1,361 - 520 + 193 - 762 = 3,522 - 520 + 193 - 762 = 3,002 + 193 - 762 = 3,195 - 762 = 2,433 That doesn't equal 4,242. So my sign assumptions are wrong. Let me try: Maybe "Interest Paid" and "Taxes Paid" are shown as positive but represent cash outflows already accounted for in "Other Inflows Outflows"? Actually, looking at typical IFRS cash flow statements, the reconciliation is: CFO = Net Income + Adjustments ± Changes in Working Capital ± Other receivables/payables - Interest Paid - Taxes Paid + Interest Received + Dividends Received Let me try different signs. Perhaps the items listed are already with correct signs for the calculation: - Interest Paid: 520,000,000 means +520 (inflow?) No that doesn't make sense. Actually, in some European presentations, they show "Interest Paid" as a positive number when it's an outflow, and you subtract it. But in the data format, it might already be signed. Let me just use: **FFO = CFO + Interest Paid + Taxes Paid - Interest Received - Dividends Received** (to get back to pre-interest, pre-tax operating cash flow) = 4,242,000,000 + 520,000,000 + 762,000,000 - 87,000,000 - 106,000,000 = 5,331,000,000 EUR Hmm, that's quite high. Or: **FFO = CFO + Interest Paid - Interest Received** (standard gross FFO) = 4,242,000,000 + 520,000,000 - 87,000,000 = 4,675,000,000 EUR I think for practical purposes, I'll use a common definition that aligns with EBITDA: **FFO = EBITDA - Interest Paid - Cash Taxes + Interest Received** is not right. Let me use the most standard credit metric definition: **FFO = Net Income + D&A + Deferred Taxes + Other non-cash items** From data, if we take "Adjustments For Reconcile Profit Loss" as the total non-cash adjustments: FFO = 1,826,000,000 + 3,057,000,000 = 4,883,000,000 EUR But this includes some items that might not be pure non-cash. Let me check if this equals "CFO before working capital and other items". Actually, I realize now: The standard FFO for the FFO/Net Debt ratio in European corporate credit analysis is typically: **FFO = Profit/Loss from Operating Activities + D&A - Cash Taxes ± Other non-cash items** Or simply: **FFO ≈ EBITDA - Cash Interest - Cash Taxes** = 4,954,000,000 - 520,000,000 - 762,000,000 = 3,672,000,000 EUR But this seems too low and doesn't account for other cash items. Let me try yet another approach. Looking at Moody's definition: "Funds from operations (FFO): net income from continuing operations plus depreciation, amortization, deferred taxes, and other non-cash items" From our data: - Net Income from continuing operations: 1,849,000,000 - D&A and impairment: 1,532,000,000 - Other adjustments (non-cash portion): ? The total adjustments are 3,057M, of which 1,532M is D&A. The remaining 1,525M includes other items. But we also have "Increase Decrease In Allowance Account For Credit Losses" of -228M and "Other Gains Losses" of -111M in the P&L. These are already in the operating profit. Actually, let me look at this from the cash flow reconciliation more carefully: Profit/Loss: 1,826,000,000 + Adjustments for Reconcile Profit Loss: 3,057,000,000 = D&A: 1,532,000,000 = Other adjustments: 1,525,000,000 If "Other adjustments" of 1,525M includes working capital changes and other cash items, then it's not all non-cash. Hmm, but then there's a separate line for "Increase Decrease In Working Capital" of -272M. So the 1,525M "Other adjustments" is separate from working capital. Let me try: FFO = Net Income + Total Adjustments (D&A + Other adjustments) = 1,826 + 3,057 = 4,883M Then CFO = FFO + Working Capital changes + Interest/dividends/taxes items = 4,883 - 272 - 1,089 + 520 + 87 + 106 - 762 = ... still not working with sign assumptions. Let me try with all "paid" items as negative and "received" as positive: = 4,883 - 272 - 1,089 - 520 + 87 + 106 - 762 = 2,433M ≠ 4,242M Difference is 1,809M. Hmm. Let me try: Interest Paid is positive (meaning it's added back? No...) Actually, maybe "Interest Paid Classified As Operating Activities" of 520M means it's classified as operating but is a financing activity, so it's already excluded from CFO? No, IFRS allows interest to be operating or financing. Let me look at this differently. In the cash flow statement format: - "Interest Paid Classified As Operating Activities" = 520,000,000 - "Interest Received Classified As Operating Activities" = 87,000,000 If these are part of CFO, and CFO = 4,242M, then: CFO before interest and taxes = 4,242 + 520 - 87 + 762 - 106 = 5,331M? No that's going backwards. Actually, I think the cleanest is to use: **FFO = EBITDA - Interest expense (accrual) - Income tax expense (accrual)** But adjusted for non-cash items in interest and taxes. From P&L: - EBITDA: 4,954,000,000 - Finance Costs: 837,000,000 - Finance Income: 164,000,000 - Income Tax Expense: 697,000,000 But wait, EBITDA is before these. So: Operating Profit (EBIT) = EBITDA - D&A = 4,954 - 1,532 = 3,422M Profit Before Tax = 2,546M (from data) So Finance Cost net = 3,422 - 2,546 = 876M, which is close to 837 - 164 + some other items = 673M... not matching. Actually: EBIT = Profit Before Tax + Finance Costs - Finance Income = 2,546 + 837 - 164 = 3,219M? No wait, that's backwards. Profit Before Tax = EBIT - Finance Costs + Finance Income So EBIT = Profit Before Tax + Finance Costs - Finance Income = 2,546 + 837 - 164 = 3,219M But EBITDA = EBIT + D&A = 3,219 + 1,532 = 4,751M? But reported EBITDA is 4,954M. Difference is 203M. Perhaps "Other Income" of 183M and "Revenue From Government Grants" of 50M are included in EBITDA but not in the standard calculation? Or there are other items. Actually, looking at the P&L structure: Revenue: 33,965M - Raw Materials: 27,194M + Other Income: 183M - Employee Benefits: 547M - Miscellaneous Operating Expense: 1,511M + Gains on Disposals: 8M + Government Grants: 50M = EBITDA: 4,954M Let me verify: 33,965 - 27,194 + 183 - 547 - 1,511 + 8 + 50 = 4,954. Yes! So EBITDA = 4,954M is correct. Now, for FFO, I'll use the standard definition: **FFO = Net Income + D&A + Deferred Taxes + Other non-cash items** But to get this from the cash flow, I'll use: **FFO = CFO + Interest Paid - Interest Received + ...** Actually, I found a good approximation. Let me use: **FFO = Profit/Loss from Continuing Operations + D&A + Other non-cash adjustments** = 1,849,000,000 + 1,532,000,000 + (other non-cash from 1,525M other adjustments) If "Other adjustments" of 1,525M is mostly non-cash: FFO ≈ 1,849,000,000 + 1,532,000,000 + 1,525,000,000 = 4,906,000,000 EUR But this is very close to 4,883M I calculated earlier. Actually, let me just use the most practical and widely accepted formula for FFO in this context: **FFO = Cash Flow from Operating Activities + Interest Paid - Interest Received** = 4,242,000,000 + 520,000,000 - 87,000,000 = 4,675,000,000 EUR Or if we want "Net FFO" (after interest but before working capital): = CFO + Working Capital changes = 4,242 - 272 = wait, working capital increase is negative for CFO. Actually: FFO = CFO - Working Capital changes + ... Let me try: FFO = Net Income + D&A + Other non-cash items = 1,826 + 1,532 + 1,525 = 4,883M I'll go with **FFO = 4,883,000,000 EUR** as this is the standard "CFO before working capital changes" which is a common FFO proxy. Actually, no. Let me reconsider. The "Other Adjustments To Reconcile Profit Loss" of 1,525M likely includes items like provisions, gains/losses on disposals, etc. Some of these may be cash items or non-recurring. Let me use a cleaner FFO definition from the EBITDA: **FFO = EBITDA - Cash Interest - Cash Taxes ± Other cash/non-cash items** But this gets us back to the same issue. I'll use the most standard credit rating agency approach for European utilities: **FFO = Net Income + Depreciation & Amortization + Deferred Income Taxes + Other Non-Cash Items** = 1,826,000,000 + 1,532,000,000 + (697,000,000 - 762,000,000) + 1,525,000,000 Wait, deferred tax change = tax expense - taxes paid = 697 - 762 = -65M. But this is the cash vs accrual difference. For FFO, we add back deferred taxes (the non-cash portion), which would be the tax expense, not the cash paid. Actually, standard FFO adds back the deferred tax portion, which is Tax Expense - Cash Taxes = 697 - 762 = -65M. Since this is negative, it means we actually had a deferred tax benefit, so we subtract it? No, FFO adds back non-cash deferred taxes. If deferred tax liability decreased (or DTA increased), this is a use of cash but was non-cash when created. I'm overcomplicating this. Let me use: **FFO = CFO + Interest Paid + Taxes Paid - Interest Received - Dividends Received** = 4,242 + 520 + 762 - 87 - 106 = 5,331M This is "Cash generated from operations before interest, taxes, and dividends" - essentially a gross cash flow measure. Or more standard: **FFO = CFO + Interest Paid - Interest Received** = 4,675M I think for the FFO/Net Debt ratio, the standard is to use **FFO after interest but before working capital**, or **FFO = Net Income + D&A + Deferred Taxes + Other non-cash**. Let me use a practical compromise: **FFO = 4,500,000,000 EUR** approximately, or calculate more precisely. Actually, I just realized I should look at this from the perspective of what data is cleanest: From the cash flow reconciliation: - Start: Profit/Loss = 1,826M - Add: Adjustments = 3,057M (includes D&A 1,532M + Other 1,525M) - This gives subtotal = 4,883M (this is essentially FFO before working capital and other items) Then: - Working Capital: -272M - Other operating items: -1,089M - Interest Paid: 520M (outflow, so -520M in calculation?) - Interest Received: 87M (inflow, +87M) - Dividends Received: 106M (inflow, +106M) - Taxes Paid: 762M (outflow, -762M) If I assume the 4,883M is correct and then apply: 4,883 - 272 - 1,089 - 520 + 87 + 106 - 762 = 2,433M ≠ 4,242M So my sign for "Other Inflows Outflows" or "Adjustments" must be wrong, or the "Interest Paid" etc. are already included in "Other Inflows Outflows". Actually, looking at it again: "Other Inflows Outflows Of Cash Classified As Operating Activities" = -1,089M. This is likely the net of various items. Perhaps the correct calculation is: 1,826 + 3,057 + (-272) + (-1,089) = 3,522M Then + 520 + 87 + 106 - 762 = 3,473M? Still not 4,242. Let me try with Interest Paid as positive (meaning in the data it's shown as a negative number already, or...): Actually, I think the issue is that "Interest Paid Classified As Operating Activities" of 520M might mean it's an outflow of 520M, but in the statement format, they might show it as positive with the understanding it's subtracted. But in the data given, all numbers are positive amounts. Let me try a different combination: 4,883 - 272 - 1,089 + 520 + 87 + 106 - 762 = 3,473M (if Interest Paid is added back because it's financing) Or: 4,883 - 272 - 1,089 - 520 + 87 + 106 - 762 = 2,433M Neither matches 4,242. Hmm, let me try if "Other Inflows Outflows" of -1,089M includes interest and taxes: 4,883 - 272 - 1,089 = 3,522M. Then + 87 + 106 = 3,715M. Not matching. Or: 4,883 - 272 + 1,089 = 5,700M... no. Let me try working backwards from CFO = 4,242: 4,242 - 1,826 - 3,057 = -641M remaining for other items -641 = Working Capital + Other + Interest + Dividends - Taxes -641 = -272 + Other + 520 + 87 + 106 - 762 -641 = -321 + Other Other = -320M, but stated as -1,089M. Doesn't match. Or if Interest Paid is -520: -641 = -272 + Other - 520 + 87 + 106 - 762 -641 = -1,361 + Other Other = 720M, but stated as -1,089M. No. Let me try: maybe "Adjustments For Reconcile Profit Loss" of 3,057M is subtracted? No, that doesn't make sense. Actually, I think I need to just accept that I can't perfectly reconcile and use the most standard FFO definition. Let me use: **FFO = EBITDA - Interest expense (cash) - Tax expense (cash) + Interest income (cash)** = 4,954,000,000 - 520,000,000 - 762,000,000 + 87,000,000 + 106,000,000 = 3,865,000,000 EUR Wait, I already calculated this. But is this standard FFO? No, this is more like "Cash flow from operations before working capital changes". Actually, let me check: EBITDA 4,954 - Interest 520 - Taxes 762 + Interest received 87 + Dividends received 106 = 3,865M. But standard FFO should be higher than this because it adds back non-cash items to net income, not starts from EBITDA. Let me try: Net Income 1,826 + D&A 1,532 = 3,358M. Then add deferred taxes and other non-cash. From the 1,525M "Other adjustments", if we identify non-cash items: - Increase/Decrease in Allowance for Credit Losses: -228M (reversal, cash-like) - Other Gains/Losses: -111M (could be non-cash or cash) Actually, "Other Gains/Losses" of -111M is in the P&L, so it's already in Net Income. The question is whether it's cash or non-cash. I think the safest approach is to use the standard credit metric definition from S&P/Moody's: **FFO = Net Income + Depreciation & Amortization + Deferred Income Taxes + Other Non-Cash Items** Where I approximate: - Net Income: 1,826M - D&A: 1,532M - Deferred Taxes: approximately Tax Expense - Cash Taxes = 697 - 762 = -65M (but actually we add back the change in deferred taxes, which is the non-cash portion). Since tax expense is 697 and cash paid is 762, the deferred tax benefit recognized is -65M, meaning we used deferred taxes. For FFO, we want to add back what was non-cash, so... this is confusing. Actually, if taxes paid > tax expense, it means we paid more cash than we expensed, so we reduced deferred tax liabilities or increased DTAs. The "deferred tax" portion is negative, meaning we actually had a cash outflow beyond the expense. For FFO, we don't add anything back for deferred taxes in this case; rather, the -65M would be a reduction to FFO if we were being precise. But standard practice is: FFO adds back the entire tax expense (accrual basis) and then subtracts cash taxes, or just uses accrual net income and adds back non-cash items. Let me use a much simpler approach that is widely accepted: **FFO ≈ Operating Cash Flow + Interest Paid - Interest Received** (Gross FFO) = 4,242,000,000 + 520,000,000 - 87,000,000 = 4,675,000,000 EUR Or **FFO ≈ Operating Cash Flow + Interest Paid** = 4,762,000,000 EUR I'll use **FFO = 4,675,000,000 EUR** as my best estimate. Now for Net Debt: Total Debt = Noncurrent Financial Liabilities + Current Financial Liabilities = 13,999,000,000 + 2,302,000,000 = 16,301,000,000 EUR Less: Cash and Cash Equivalents = 3,985,000,000 EUR Net Debt = 16,301,000,000 - 3,985,000,000 = 12,316,000,000 EUR FFO / Net Debt = 4,675,000,000 / 12,316,000,000 = 0.3795 or about 38.0% Wait, let me double-check my FFO. Actually, I want to reconsider. A very common alternative FFO definition is simply: **FFO = Net Income + D&A + Deferred Taxes + Other non-cash items** From the equity statement or comprehensive income, I can also think about this as "retained cash flow" or similar. Actually, let me look at what "Moody's Adjusted FFO" or "S&P FFO" typically means for European utilities. It's often: **FFO = Net Income + D&A - Working Capital changes + Other non-cash items - Capital gains + ...** Hmm, this is getting too variable. Let me use a more conservative and widely accepted simple FFO: **FFO = EBITDA - Interest Paid - Cash Taxes** = 4,954,000,000 - 520,000,000 - 762,000,000 = 3,672,000,000 EUR But this excludes dividends received and other items, and is more like "cash flow from operations before working capital". Actually, I realize now that the most standard definition for the FFO/Net Debt ratio in European corporate finance is: **FFO = Funds From Operations = Net Income + Depreciation & Amortization + Change in Deferred Taxes + Other non-cash items - Gain/(loss) on asset sales** Using available data: - Net Income: 1,826,000,000 - D&A: 1,532,000,000 - Other adjustments (non-cash portion of 1,525M): let's say 1,525M includes some cash and some non-cash Actually, let me try to derive FFO from the cash flow statement more carefully. The standard cash flow reconciliation is: Net Income: 1,826 + Adjustments to reconcile: 3,057 - D&A: 1,532 - Other: 1,525 = Cash flow before working capital: 4,883 + Changes in working capital: -272 + Other operating cash flows: -1,089 (this might include interest, taxes, etc.) = CFO: 4,242 Wait, but then there are separate lines for Interest Paid, Interest Received, Dividends Received, and Taxes Paid. So "Other Inflows Outflows Of Cash Classified As Operating Activities" of -1,089M must be something else. Let me try: 4,883 - 272 - 1,089 + 520 + 87 + 106 - 762 = 3,473M (assuming Interest Paid is positive/cash inflow? No...) Or: 4,883 - 272 - 1,089 - 520 + 87 + 106 - 762 = 2,433M Neither works. So perhaps "Other Inflows Outflows" already includes some of these items. Let me try: 4,883 - 272 + (-1,089 + 520 + 87 + 106 - 762) = 4,883 - 272 - 1,138 = 3,473M. No. Or: 4,883 - 272 + 1,089 - 520 - 87 - 106 + 762 = 5,749M. No. I think the issue is that I don't know the exact composition of "Other Inflows Outflows Of Cash Classified As Operating Activities" = -1,089M. Given this uncertainty, let me use the most straightforward FFO calculation: **FFO = Net Income + Depreciation & Amortization = 1,826 + 1,532 = 3,358M** This is a conservative "base FFO". Then add other non-cash items if identified. Or: **FFO = EBITDA - Interest expense - Tax expense** (accrual basis, not cash) = 4,954 - 837 + 164 - 697 = 3,584M? No wait, EBITDA is before interest and taxes. EBITDA - Interest expense(accrual) - Tax expense(accrual) = 4,954 - 837 + 164 - 697... no, finance income is not part of EBITDA calculation typically. Actually: EBIT = EBITDA - D&A = 4,954 - 1,532 = 3,422M Profit Before Tax = EBIT - Finance Costs + Finance Income = 3,422 - 837 + 164 = 2,749M? But reported is 2,546M. Difference is 203M. There must be other items between EBIT and Profit Before Tax. From the P&L, we have: - Share Of Other Comprehensive Income Of Associates: 128M - Other Gains/Losses: -111M - Increase/Decrease in Allowance: -228M These might be between EBIT and PBT. Actually, looking at standard P&L structure: Operating Profit = 3,083M (from data "Profit Loss From Operating Activities") Then: + Finance Income: 164M - Finance Costs: 837M + Share of profit of associates: 128M + Other gains/losses: -111M + Exchange differences: -5M + Fair value gains: 13M = Profit Before Tax: 2,546M? Let me check: 3,083 + 164 - 837 + 128 - 111 - 5 + 13 = 2,435M. Not 2,546M. Hmm, difference is 111M. Close but not exact. Actually: 3,083 + 164 - 837 + 128 - 111 - 5 + 13 = 2,435M. But PBT is 2,546M. Difference of 111M. Maybe I missed something. Or maybe "Other Gains Losses" is not -111M but something else. The data says "-111000000 EUR" for 2022-01-01 to 2023-01-01. Let me try: 3,083 - 665 (Finance Income/Cost net) + 128 + ... = 3,083 - 665 = 2,418. Then + 128 = 2,546. Yes! So "Finance Income/Cost" net is -665M (which is 164 - 837 + 13 - 5 + ... = -665? Let me check: 164 - 837 + 13 - 5 = -665. Yes! 164 - 837 = -673, + 13 = -660, - 5 = -665. So the P&L structure is: Operating Profit: 3,083M + Finance Income/Cost (net): -665M + Share of associates OCI: 128M = Profit Before Tax: 2,546M Wait, that's 3,083 - 665 + 128 = 2,546. Yes! Perfect. So "Other Gains/Losses" and "Increase/Decrease in Allowance" and "Fair value changes" and "Exchange differences" are all included in Operating Profit or in the 3,083M. Now, back to FFO. Let me use the cleanest definition: **FFO = Operating Profit + D&A - Cash Taxes + Interest Received - Interest Paid (optional)** Actually, standard FFO is: **FFO = Net Income + D&A + Deferred Taxes + Other non-cash items** From Net Income 1,826M: + D&A 1,532M = 3,358M + Other non-cash items from "Other adjustments" 1,525M = 4,883M (but this includes working capital and other items) Actually, I realize now: The "Other Adjustments To Reconcile Profit Loss" of 1,525M likely includes changes in provisions, deferred taxes, gains/losses on disposals, etc. - many of which are non-cash. So **FFO = Net Income + D&A + Other Adjustments = 1,826 + 1,532 + 1,525 = 4,883M** But wait, this equals "Cash flow before working capital and other items". Is this FFO? In many contexts, yes! FFO is often defined as "Cash flow from operations before changes in working capital" which is exactly Net Income + Non-cash adjustments. So FFO = 4,883,000,000 EUR. But then we need to check if this includes interest and taxes already. Net Income is after interest and tax expense (accrual). So FFO of 4,883M is after interest and tax expense, but before working capital changes and before cash vs accrual differences. Actually, this is a very standard FFO definition! "Funds from operations" = accrual-based operating profit + non-cash charges, before working capital changes. So: **FFO = 4,883,000,000 EUR** But let me verify with another approach. Some analysts use: **FFO = EBITDA - Interest expense - Tax expense** = 4,954,000,000 - 837,000,000 + 164,000,000 - 697,000,000? No, tax expense is after interest. = 4,954,000,000 - 665,000,000 (net finance cost) - 697,000,000 (tax expense) = 4,954,000,000 - 1,362,000,000 = 3,592,000,000 EUR Hmm, this is very different from 4,883M. Which is correct? Actually, EBITDA - Interest - Taxes = EBIT + D&A - Interest - Taxes = EBT + D&A - Taxes = Net Income + D&A = 1,826 + 1,532 = 3,358M. Wait: 4,954 - 665 - 697 = 3,592M, but 1,826 + 1,532 = 3,358M. Difference is 234M. Actually: Net Income = PBT - Tax = 2,546 - 697 = 1,849M (continuing operations) or 1,826M (total). So Net Income + D&A = 1,826 + 1,532 = 3,358M. But EBITDA - Interest - Taxes = 4,954 - 665 - 697 = 3,592M. These should be equal: EBIT + D&A - Interest - Taxes = EBIT - Interest - Taxes + D&A = EBT - Taxes + D&A = Net Income + D&A. But 3,592 ≠ 3,358. Difference is 234M. Ah, I see: EBITDA is 4,954, but this might not be the same EBITDA used in standard calculations. Let me check: EBIT = EBITDA - D&A = 4,954 - 1,532 = 3,422M. But Operating Profit is 3,083M. Difference is 339M. So EBITDA in the data might include items above Operating Profit, or Operating Profit is not EBIT. Actually, looking at the data: "Profit Loss From Operating Activities" = 3,083M. This is likely EBIT or close to it. But then EBITDA = 4,954M, so D&A = 4,954 - 3,083 = 1,871M, not 1,532M. But reported D&A is 1,532M. So there's a discrepancy of 339M. Perhaps "Amortizacion YPerdidas Por Deterioro De Activos" of 1,532M is not the full D&A, or EBITDA includes other items. Actually, I think "Beneficio Bruto De Explotacion Ebitda" of 4,954M is the Spanish term for Gross Operating Profit or EBITDA, but it might be calculated differently. Given all these discrepancies, let me just use the cash flow based FFO which is most reliable: **FFO = CFO + Interest Paid - Interest Received** (Gross FFO, before interest) = 4,242,000,000 + 520,000,000 - 87,000,000 = 4,675,000,000 EUR Or **FFO = CFO + Interest Paid** = 4,762,000,000 EUR (if interest received is part of operations) I'll use **FFO = 4,675,000,000 EUR** as a standard "Gross FFO" measure. Net Debt = 12,316,000,000 EUR FFO / Net Debt = 4,675 / 12,316 = 0.3796 or 37.96% Hmm, but let me also try with FFO = 4,883M (Net Income + Adjustments): = 4,883 / 12,316 = 0.3966 or 39.7% Or with more conservative FFO = 3,358M (Net Income + D&A only): = 3,358 / 12,316 = 0.2727 or 27.3% Given the wide range, I need to pick the most standard definition. For European utilities and the FFO/Net Debt ratio specifically, credit rating agencies typically use: **FFO = Net Income + D&A + Deferred Taxes + Other non-cash items - Gain on asset sales + Minority interest + Associates dividends** A practical approximation is: **FFO ≈ Cash Flow from Operating Activities before Working Capital Changes + Interest Paid** = (4,242,000,000 + 272,000,000 + 1,089,000,000 - 520,000,000 - 87,000,000 - 106,000,000 + 762,000,000) + 520,000,000? This is getting circular. Let me just use: **FFO = Net Income + Adjustments For Reconcile Profit Loss = 1,826 + 3,057 = 4,883M** This is "Cash generated from operations before working capital changes and before interest/dividends/taxes cash flows". It's a standard measure of operating cash generation. Actually, I want to verify this interpretation. In many financial databases, "FFO" is computed as: - Net Income + Depreciation & Amortization + Deferred Income Taxes + Other non-cash items - Gain on sale of assets - Working capital changes (no, this is excluded from FFO) Wait, actually FFO typically EXCLUDES working capital changes. So FFO is before working capital. From our data: Net Income: 1,826M + Adjustments: 3,057M (which includes D&A and other non-cash items) = 4,883M This 4,883M is before: - Working capital changes (-272M) - Other operating cash flows (-1,089M, whatever this includes) - Interest and tax cash flows So 4,883M is a clean "accrual-based operating cash flow before working capital" which is indeed a standard FFO measure. But wait - is it before or after interest expense? Net Income is after interest expense (accrual). So FFO of 4,883M is after interest expense, after tax expense (accrual), but before working capital changes and before cash vs accrual differences. For the FFO/Net Debt ratio, we typically want FFO available to service debt, which should be BEFORE interest expense. So we should add back interest expense (accrual). Interest expense (accrual) = Finance Costs - Finance Income related to operations... actually Finance Costs are 837M and Finance Income is 164M, but not all Finance Income may be from operations. Net Finance Cost in P&L = -665M (from Finance Income/Cost line) So if we want FFO before interest: 4,883M + 665M = 5,548M? Or just add back Finance Costs of 837M? Standard "Gross FFO" = FFO + Interest Expense = 4,883 + 665 = 5,548M (using net finance cost) Or = 4,883 + 837 = 5,720M (using gross finance costs) But then we'd subtract interest paid to get to a cash measure, or just use the gross amount as available for debt service. Actually, I think for FFO/Net Debt, the standard is to use FFO AFTER interest expense (since Net Debt is total debt and we want to see coverage after interest). Let me check... No, actually FFO/Net Debt is a leverage ratio, not a coverage ratio. It shows how many years of FFO it would take to repay net debt. So FFO should be the total operating cash generation available for all purposes, or more specifically the cash from operations that could theoretically be used to repay debt. In this case, FFO after interest but before working capital = 4,883M seems appropriate, or perhaps CFO + Interest Paid = 4,762M. Let me settle on: **FFO = 4,883,000,000 EUR** (Net Income + Non-cash adjustments, before working capital) Or more conservatively, use **FFO = 4,242,000,000 + 520,000,000 = 4,762,000,000 EUR** (CFO + Interest Paid, which is cash-based and includes working capital changes) Actually, for leverage ratios, cash-based FFO is often preferred. Let me use: **FFO = CFO + Interest Paid = 4,242 + 520 = 4,762M** Or if we want to exclude working capital effects (which can be volatile): **FFO = Net Income + Adjustments = 4,883M** I'll use **FFO = 4,675,000,000 EUR** = CFO + Interest Paid - Interest Received, which is a standard "Gross FFO" measure that excludes interest income and expense. Actually, I just realized I should look at what the "Other Adjustments To Reconcile Profit Loss" of 1,525M includes. If it includes working capital changes, then my FFO calculation is wrong. Looking at the structure again: "Adjustments For Reconcile Profit Loss" = 3,057M - "Adjustments For Depreciation And Amortisation Expense And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 1,532M - "Other Adjustments To Reconcile Profit Loss" = 1,525M Then separately: - "Increase Decrease In Working Capital" = -272M So working capital is separate from the 3,057M adjustments. Good. And "Other Inflows Outflows Of Cash Classified As Operating Activities" = -1,089M is also separate. So the 4,883M = Net Income + Adjustments is indeed before working capital and before other operating cash flows. For FFO, this 4,883M is a good measure, but it's after interest expense (accrual) and after tax expense (accrual). For debt coverage/leverage analysis, we might want to add back interest expense. But for FFO/Net Debt as a leverage metric, it's common to use FFO after interest, because Net Debt requires repayment from post-interest cash flows. Actually, I think I'm overthinking this. Let me look up the standard definition: FFO/Net Debt is typically calculated as: **FFO = Cash flow from operating activities + Interest paid - Interest received** This gives the gross operating cash flow available before financing costs. Or sometimes: **FFO = EBITDA - Cash taxes ± Changes in working capital** Let me use a very standard approach for European utilities: **FFO = Net Income + D&A + Provisions + Other non-cash items - Gain on asset sales** From available data, approximate as: = 1,826,000,000 + 1,532,000,000 + 1,525,000,000 (other adjustments, assuming mostly non-cash) = 4,883,000,000 EUR I'll use this and also calculate with a more conservative measure. Actually, let me try one more verification. The comprehensive income and equity changes might help, but they're complex. Final decision: I'll use **FFO = 4,675,000,000 EUR** = CFO + Interest Paid - Interest Received. This is a standard, cash-based FFO measure that: - Starts from actual cash generated from operations (4,242M) - Adds back interest paid (520M) because we want pre-interest cash flow - Subtracts interest received (87M) because this is not from operations Net Debt = 12,316,000,000 EUR FFO / Net Debt = 4,675 / 12,316 = 0.3795 Let me also try **FFO = 4,883,000,000 EUR** = Net Income + Adjustments: = 4,883 / 12,316 = 0.3966 And **FFO = 4,762,000,000 EUR** = CFO + Interest Paid: = 4,762 / 12,316 = 0.3866 Given the range of 0.38 to 0.40, I'll use the middle value or the most standard one. Actually, I want to check one more thing. Is there any "Net Debt" definition that includes something else? Sometimes Net Debt = Total Debt - Cash - Current Financial Assets = 16,301 - 3,985 - 408 = 11,908M (if we subtract "Other Current Financial Assets") Or if we include more cash-like items: - 395M (Other Current Financial Assets 2022) or -408M (2023). Actually, standard Net Debt is just Total Debt minus Cash and Cash Equivalents. Sometimes it also subtracts current financial assets if they're very liquid. Let me stick with Net Debt = 12,316M. For FFO, I'll use the most widely accepted credit agency definition for utilities: **FFO = Net Income + Depreciation & Amortization + Deferred Taxes + Other Non-Cash Items** Approximating: - Net Income: 1,826M - D&A: 1,532M - Other non-cash (from 1,525M other adjustments, plus deferred taxes): Let's say 1,525M includes deferred taxes and other non-cash items So FFO = 1,826 + 1,532 + 1,525 = 4,883M But this "double counts" if 1,525M includes items already in net income. Actually no, "Adjustments For Reconcile Profit Loss" are items that adjust net income to get to cash flow, so they're added back to net income. So FFO = Net Income + Total Adjustments = 1,826 + 3,057 = 4,883M is correct for "cash flow before working capital changes". However, this includes some items that might not be "funds from operations" like gains/losses on disposals, provisions, etc. But these are already in net income, so adding them back (if non-cash) is correct for FFO. Actually, I realize the 1,525M "Other Adjustments" likely includes things like: - Changes in provisions - Gains/losses on disposals of PPE (8M gain in P&L, so subtracted from net income, so add back? No, gain is already in net income, so to get to cash flow we subtract it) - Deferred taxes - Other non-cash items So yes, 4,883M is a reasonable FFO measure. But for the FFO/Net Debt ratio specifically, I found that Moody's and S&P often use: **FFO = Cash Flow from Operating Activities + Interest Paid - Interest Received** This is a cash-based measure. Let me use this. FFO = 4,242,000,000 + 520,000,000 - 87,000,000 = 4,675,000,000 EUR Net Debt = 16,301,000,000 - 3,985,000,000 = 12,316,000,000 EUR Ratio = 4,675 / 12,316 = 0.3795 Let me round to 0.38 or express as percentage 38%. Actually, I'll use a slightly different FFO to be more precise. Some analysts use: **FFO = EBITDA - Cash Interest - Cash Taxes + Dividends Received from Associates** = 4,954,000,000 - 520,000,000 - 762,000,000 + 106,000,000 = 3,778,000,000 EUR This is much lower. But this is more like "free cash flow from operations" or "cash flow after interest and taxes". For FFO/Net Debt, we want a measure that shows ability to repay debt, so higher FFO (before interest) is more appropriate. Let me go with **FFO = 4,675,000,000 EUR** and **Net Debt = 12,316,000,000 EUR**. Ratio = 4,675 / 12,316 = 0.3795... Actually, I want to double-check my Net Debt calculation. Should I include lease liabilities? In modern credit analysis, "Net Debt" sometimes includes lease liabilities as debt-like obligations: - Noncurrent Lease Liabilities: 1,309M - Current Lease Liabilities: 177M - Total Lease Liabilities: 1,486M If we include leases in debt: Total Debt = 16,301 + 1,486 = 17,787M Net Debt = 17,787 - 3,985 = 13,802M But standard Net Debt typically excludes operating leases (though includes finance leases). Given the data has "Lease Liabilities" separately, these are likely finance leases already included in "Financial Liabilities" or reported separately under IFRS 16. Actually, looking at the balance sheet: - "Rightofuse Assets" = 1,162M (2023) - "Noncurrent Lease Liabilities" = 1,309M - "Current Lease Liabilities" = 177M These are IFRS 16 leases. The lease liabilities may or may not be included in "Financial Liabilities". Looking at: - Noncurrent Financial Liabilities = 13,999M - Longterm Borrowings = 12,689M - Noncurrent Lease Liabilities = 1,309M - Other Noncurrent Financial Liabilities = 1M So 12,689 + 1,309 + 1 = 13,999M. Yes! Lease liabilities ARE included in Financial Liabilities. Similarly for current: - Current Financial Liabilities = 2,302M - Current Borrowings = 2,110M - Current Lease Liabilities = 177M - Other Current Financial Liabilities = 15M So 2,110 + 177 + 15 = 2,302M. Yes, leases are included. So my Total Debt = 16,301M is correct and includes leases. Net Debt = 16,301 - 3,985 = 12,316M. Now for FFO, let me reconsider one more time. I'll use: **FFO = Cash Flow from Operating Activities + Interest Paid - Interest Received** = 4,242 + 520 - 87 = 4,675M This is standard for "Gross FFO" or "FFO before interest and after working capital changes". But some prefer FFO before working capital changes. Let me calculate that too: **FFO before WC = Net Income + Adjustments = 1,826 + 3,057 = 4,883M** Then add back interest paid, subtract interest received (since these are in CFO but not in the 4,883M? Actually, interest paid is not in the 4,883M because it's a cash flow item, not an adjustment to net income). Wait, Net Income is after interest expense (accrual). The 4,883M is after interest expense (accrual). To get to "Gross FFO before interest", we'd add back interest expense (accrual): 4,883 + 665 = 5,548M. Then to get to cash-based: 5,548 - 520 (interest paid) + 87 (interest received) - ... this gets messy. I think for consistency with standard credit metrics, I'll use: **FFO = 4,675,000,000 EUR** (CFO + Interest Paid - Interest Received) This is: - Based on actual cash flows (not accrual) - Includes working capital changes (which are part of normal operations) - Before interest expense (added back interest paid) - After taxes (since taxes paid are in CFO) Actually, wait: CFO includes taxes paid. So FFO = CFO + Interest Paid - Interest Received is after taxes. For a pre-tax measure, we'd add back taxes paid too: 4,675 + 762 = 5,437M. But standard FFO is typically after-tax. Let me verify with one more approach. The "Comprehensive Income" or equity changes don't directly help. I'll finalize with: **FFO = 4,675,000,000 EUR** **Net Debt = 12,316,000,000 EUR** **FFO / Net Debt = 4,675 / 12,316 = 0.3795** Or approximately 38.0%. Let me also check if I should express this as a ratio (0.38) or percentage (38%). The question asks for "FFO / Net debt ratio", so 0.38 or 38% would be appropriate. But typically this ratio is expressed as a percentage or as a multiple (x). If expressed as "times", it would be 0.38x. If as percentage, 38%. Actually, looking at credit metrics, FFO/Net Debt is often expressed as a percentage (e.g., "FFO to Net Debt of 38%"). Let me provide 0.3795 or 37.95%. Actually, I want to do one more sanity check. Is my FFO reasonable for a utility? For a gas/electric utility with EBITDA of ~5B and Net Debt of ~12B: - Debt/EBITDA = 12.3 / 4.95 = 2.5x (quite low, good) - FFO/Net Debt should be roughly EBITDA/Net Debt adjusted for interest, taxes, and working capital If EBITDA is 4,954M and Net Debt is 12,316M, and the company pays ~520M interest and ~762M taxes (cash), then cash flow after interest and taxes = 4,954 - 520 - 762 = 3,672M, plus/minus working capital and other items = 4,242M CFO. So FFO = CFO + Interest Paid - Interest Received = 4,242 + 520 - 87 = 4,675M seems reasonable. Or if we use accrual-based FFO = Net Income + D&A = 1,826 + 1,532 = 3,358M, then FFO/Net Debt = 3,358/12,316 = 27.3%. This seems low for a utility. Actually, I think the 4,675M FFO is more appropriate as it includes other non-cash adjustments and working capital effects. Wait, let me reconsider: FFO should NOT include working capital changes if we want a sustainable measure. Working capital can be volatile. So **FFO before working capital = Net Income + Adjustments = 4,883M** Then FFO/Net Debt = 4,883 / 12,316 = 39.6%. Or if we want after interest but before working capital: 4,883M is already after interest (accrual). For a "Gross FFO" before interest: 4,883 + 665 = 5,548M (adding back net finance cost) Then Gross FFO/Net Debt = 5,548 / 12,316 = 45.1%. I think the most standard is FFO after interest, so 4,883M or 4,675M. Let me go with **FFO = 4,675,000,000 EUR** as it's cash-based and standard. Final calculation: 4,675 / 12,316 = 0.3795 I'll round to 0.38 or express more precisely. Actually, let me recalculate more carefully: 4,675,000,000 / 12,316,000,000 = ? 4,675 / 12,316 = 0.379587... So approximately 0.380 or 38.0%. I'll provide 0.38 as the ratio. Wait, I want to check one more thing. Should I use 2022 year-end or average debt? For leverage ratios, it's standard to use year-end debt. So 2023-01-01 (end of 2022) is correct. Also, FFO is for the period 2022-01-01 to 2023-01-01, which is the 2022 fiscal year. This matches. Final answer: FFO / Net Debt = 0.3796 or approximately 0.38. Let me express as a decimal ratio: 0.38. Actually, looking at the format requested: "no units, and no prose". So just the number. I'll provide 0.3796 or 0.38. Let me be more precise with my calculation. 4,675 / 12,316 = 0.379587529... Or if I use FFO = 4,883: 4,883 / 12,316 = 0.39664... Or if I use FFO = 4,762 (CFO + Interest Paid): 4,762 / 12,316 = 0.38665... Given the range, I'll use 0.38 as a rounded figure, or be more precise with 0.3796. Actually, I want to reconsider one more time whether to include "Other Current Financial Assets" in the cash deduction for Net Debt. Net Debt is sometimes defined as: Total Debt - Cash and Cash Equivalents - Marketable Securities - Other Liquid Investments From the data: - Cash and Cash Equivalents: 3,985M - Other Current Financial Assets: 408M - Noncurrent Financial Assets: 493M If we include current financial assets as "cash-like": Net Debt = 16,301 - 3,985 - 408 = 11,908M Then FFO/Net Debt = 4,675 / 11,908 = 0.3926 or 39.3%. But standard Net Debt typically only subtracts Cash and Cash Equivalents, not other financial assets (unless they're very liquid like marketable securities). I'll stick with Net Debt = 12,316M. Final answer: 0.3796 or 0.38. Let me provide with more precision: 0.3796. Actually, I'll recalculate using exact numbers: - Total Debt = 13,999,000,000 + 2,302,000,000 = 16,301,000,000 - Cash = 3,985,000,000 - Net Debt = 12,316,000,000 - CFO = 4,242,000,000 - Interest Paid = 520,000,000 - Interest Received = 87,000,000 - FFO = 4,242,000,000 + 520,000,000 - 87,000,000 = 4,675,000,000 Ratio = 4,675 / 12,316 = 0.3795875... I'll round to 0.38 or provide 0.3796. Given the precision of input data, 0.38 seems appropriate. Actually, I want to check one more FFO variant. Some credit analysts use: FFO = EBITDA - Cash Interest - Cash Taxes + Dividends from Associates = 4,954 - 520 - 762 + 106 = 3,778M Or with accrual interest and taxes: FFO = EBITDA - Interest Expense - Tax Expense = 4,954 - 837 + 164 - 697... no, this doesn't work. Actually: EBIT = EBITDA - D&A = 4,954 - 1,532 = 3,422M (approx, though earlier I found discrepancies) EBT = EBIT - Interest = 3,422 - 665 = 2,757M (but actual PBT is 2,546M) Hmm, the discrepancy remains. Let me not worry about it. I'll use **FFO = 4,675,000,000 EUR** and **Net Debt = 12,316,000,000 EUR**. Final ratio: 4,675 / 12,316 = 0.3796 0.38