I need to calculate the FFO / Net debt ratio for 2022. Let me break this down. First, I need to understand what FFO (Funds From Operations) and Net debt are. **FFO** is typically calculated as: - Net income + Depreciation and amortization + Deferred taxes + Other non-cash items Or more commonly for utilities/infrastructure companies: - Operating profit (EBIT) + Depreciation and amortization - Taxes (or using cash flow from operations before working capital changes) Let me look at what's available in the data. From the cash flow statement section: - "Cash Flows From Used In Operations Before Changes In Working Capital" 2022: 1,062,464,000 EUR - "Adjustments For Depreciation And Amortisation Expense" 2022: 594,636,000 EUR - "Adjustments For Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" 2022: 67,680,000 EUR From the income statement: - "Profit Loss From Operating Activities" (EBIT) 2022: 565,851,000 EUR - "Profit Loss" (Net Income) 2022: 311,160,000 EUR A common FFO calculation for credit rating purposes (like S&P methodology) is: FFO = Net income + Depreciation & Amortization + Deferred taxes + Other non-cash items Or alternatively: FFO = Cash flow from operating activities before working capital changes Looking at the data, "Cash Flows From Used In Operations Before Changes In Working Capital" 2022 = 1,062,464,000 EUR seems to be the best proxy for FFO. This is essentially EBITDA - taxes or EBIT + D&A - taxes paid. Let me verify this: - EBIT: 565,851,000 - + D&A: 594,636,000 - = EBITDA: 1,160,487,000 - - Taxes paid: 178,506,000 - = 981,981,000... this doesn't match exactly. Actually, "Cash Flows From Used In Operations Before Changes In Working Capital" includes: - Adjustments for depreciation and amortization: 594,636,000 - Adjustments for impairment: 67,680,000 - Adjustments for finance costs: 85,708,000 - Various other items Let me recalculate: Profit Loss (311,160,000) + D&A (594,636,000) + Impairment (67,680,000) + Finance costs adjustment (85,708,000) + other items... Actually, the standard FFO for credit analysis is typically: FFO = Net income + D&A + Deferred taxes + Other non-cash items - Gain on asset sales Or more precisely, looking at the cash flow: FFO = Cash flow from operations before changes in working capital = 1,062,464,000 EUR This is a common and well-accepted proxy for FFO in financial analysis. **Net Debt** = Total debt - Cash and cash equivalents From the balance sheet, I need to identify debt and cash: Cash and cash equivalents: - "DisponibilitàLiquide EMezzi Equivalenti Alla Fine Dellesercizio Continued Operations" 2023-01-01 (end of 2022): 559,908,000 EUR Debt items (2023-01-01, which is end of 2022): - "Other Noncurrent Financial Liabilities" (long-term debt): 4,722,263,000 EUR - "Other Current Financial Liabilities" (short-term debt): 619,418,000 EUR Total debt = 4,722,263,000 + 619,418,000 = 5,341,681,000 EUR Net debt = Total debt - Cash = 5,341,681,000 - 559,908,000 = 4,781,773,000 EUR Wait - I need to check if there are other debt-like items. Let me look more carefully. Looking at current liabilities: - "Other Current Financial Liabilities": 619,418,000 EUR Noncurrent liabilities: - "Other Noncurrent Financial Liabilities": 4,722,263,000 EUR Are there any other financial liabilities? Let me check "Noncurrent Contract Liabilities" - this is typically deferred revenue, not debt. So Gross debt = 4,722,263,000 + 619,418,000 = 5,341,681,000 EUR Net debt = 5,341,681,000 - 559,908,000 = 4,781,773,000 EUR Now, FFO / Net debt ratio: FFO = 1,062,464,000 EUR Net debt = 4,781,773,000 EUR FFO / Net debt = 1,062,464,000 / 4,781,773,000 = 0.2222... or about 22.2% Let me double-check my FFO figure. Actually, in many European utility contexts, FFO is also calculated as: FFO = Profit Loss From Operating Activities + D&A - Taxes + Interest expense Or: FFO = EBIT + D&A - Cash taxes EBIT = 565,851,000 D&A = 594,636,000 (from cash flow) or 625,799,000 (from income statement "Ammortamenti EAccantonamenti") Wait, let me check: "Ammortamenti EAccantonamenti" 2022 = 625,799,000 EUR. This is depreciation and amortization + provisions. And "Adjustments For Depreciation And Amortisation Expense" 2022 = 594,636,000 EUR. This is pure D&A. Also "Adjustments For Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" 2022 = 67,680,000 EUR. The "Cash Flows From Used In Operations Before Changes In Working Capital" 2022 = 1,062,464,000 EUR is the most comprehensive FFO proxy. Let me verify: 311,160,000 (Net income) + 594,636,000 (D&A) + 67,680,000 (Impairment) + 85,708,000 (Finance costs) + 14,167,000 (Variazione Fondo Rischi) - 19,158,000 (Employee benefits) - 178,506,000 (Taxes paid)... Actually, let me just use the given "Cash Flows From Used In Operations Before Changes In Working Capital" = 1,062,464,000 as FFO. This is standard practice. For Net Debt, I need to be more careful. Let me check if "Other Noncurrent Financial Liabilities" and "Other Current Financial Liabilities" capture all debt. Actually, I should also check if there are lease liabilities included in "Rightofuse Assets" - the corresponding liability might be elsewhere. Looking at the balance sheet structure, I don't see explicit lease liabilities broken out. They might be in "Other Noncurrent Financial Liabilities" or "Other Current Financial Liabilities". Also, I need to check: is there any debt in "Trade And Other Current Payables"? Typically no, this is operational payables. Let me recalculate with the 2022 year-end figures (which are 2023-01-01 in the data): Cash: 559,908,000 EUR Financial liabilities: - Other Noncurrent Financial Liabilities: 4,722,263,000 EUR - Other Current Financial Liabilities: 619,418,000 EUR Total financial debt: 5,341,681,000 EUR Net debt: 5,341,681,000 - 559,908,000 = 4,781,773,000 EUR FFO/Net debt = 1,062,464,000 / 4,781,773,000 = 0.2222 Or as a percentage: 22.22% Actually, I want to double-check if I should use average net debt or year-end net debt. Typically, FFO/net debt uses year-end net debt for simplicity in annual report analysis. Let me also verify using 2022 beginning of year (2022-01-01) net debt to see if it makes sense: Cash 2022-01-01: 680,820,000 EUR (from "DisponibilitàLiquide EMezzi Equivalenti Alla Fine Dellesercizio Continued Operations" 2022-01-01) Wait, that's 2022 end of year for 2021... Let me check: "DisponibilitàLiquide EMezzi Equivalenti Alla Fine Dellesercizio Continued Operations" 2022-01-01: 680,820,000 EUR - this is the 2021 year-end cash. Debt 2022-01-01: - Other Noncurrent Financial Liabilities: 4,791,979,000 EUR - Other Current Financial Liabilities: 285,222,000 EUR Net debt 2021 year-end = 4,791,979,000 + 285,222,000 - 680,820,000 = 4,396,381,000 EUR Average net debt = (4,781,773,000 + 4,396,381,000) / 2 = 4,589,077,000 EUR FFO/Average net debt = 1,062,464,000 / 4,589,077,000 = 23.15% But typically for credit ratios, year-end net debt is used, especially when the ratio is reported at year-end. Actually, looking more carefully at standard practice (e.g., Moody's, S&P), FFO/Net Debt is typically calculated as: - FFO for the year / Net Debt at year-end So I'll use: 1,062,464,000 / 4,781,773,000 = 0.2222 Or approximately 22.2% or 0.222. Let me also consider if there's a more standard FFO definition. Some definitions use: FFO = Net income + D&A + Deferred taxes + Other non-cash items From the data: - Net income: 311,160,000 - D&A: 594,636,000 (or 625,799,000?) - Deferred tax change: 202,606,000 - 179,823,000 = 22,783,000 (deferred tax asset decrease, so add back) If I use the income statement D&A (Ammortamenti EAccantonamenti = 625,799,000), this includes more than just D&A. Actually "Adjustments For Depreciation And Amortisation Expense" = 594,636,000 is clearly the D&A add-back in cash flow. FFO = 311,160,000 + 594,636,000 + 67,680,000 + 85,708,000 + ... This gets complicated. The "Cash Flows From Used In Operations Before Changes In Working Capital" = 1,062,464,000 is the cleanest FFO proxy and includes all these adjustments properly. Let me verify by checking if this equals: Net income + all non-cash adjustments - taxes paid + interest paid (or similar). Actually, standard FFO in European utilities often = Funds from operations = EBIT + D&A - Cash taxes EBIT = 565,851,000 D&A = 594,636,000 Cash taxes = 178,506,000 FFO = 565,851,000 + 594,636,000 - 178,506,000 = 981,981,000 But this doesn't match 1,062,464,000. The difference is about 80 million, which could be interest received/paid adjustments, dividends received, etc. Actually, looking at the cash flow statement more carefully: "Cash Flows From Used In Operations Before Changes In Working Capital" is calculated as: Profit Loss + D&A + Impairment + other non-cash items + finance costs - taxes paid + other items Let me try: 311,160,000 + 594,636,000 + 67,680,000 + (-19,158,000) + 14,167,000 + 85,708,000 - 178,506,000 + ... = 311,160,000 + 594,636,000 = 905,796,000 + 67,680,000 = 973,476,000 + 85,708,000 = 1,059,184,000 (finance costs added back) - 178,506,000 = 880,678,000 + 14,167,000 = 894,845,000 (variazione fondo rischi) - 19,158,000 = 875,687,000 (employee benefits) - 7,008,000? = need to check other items Hmm, this doesn't match. Let me look at what else is in the cash flow. Actually, I think "Cash Flows From Used In Operations Before Changes In Working Capital" already includes interest received and dividends received in some presentations, or it might be calculated differently. Regardless, 1,062,464,000 is the standard figure to use as FFO proxy in this context. For Net Debt, let me also consider if I should include or exclude certain items. Some analysts include: - Gross financial debt less cash and cash equivalents - Sometimes also less current financial assets Looking at "Other Current Financial Assets" 2023-01-01: 342,085,000 EUR - this includes financial assets that could be liquid. But standard Net Debt = Gross Debt - Cash and Cash Equivalents = 5,341,681,000 - 559,908,000 = 4,781,773,000 Some might also subtract "Other Current Financial Assets" if they're very liquid: Net Debt = 5,341,681,000 - 559,908,000 - 342,085,000 = 4,439,688,000 But this would be "Net Debt and financial assets" or similar. Standard practice is just Gross Debt - Cash. Actually, let me check if there's any other cash-like item. "DisponibilitàLiquide EMezzi Equivalenti Alla Fine Dellesercizio Continued Operations" = 559,908,000 is clearly cash and equivalents. Also "Other Current Financial Assets" of 342,085,000 includes "AttivitàFinanziarie Correnti Di Cui Verso Parti Correlate" = 117,998,000. These are likely trade receivables or loans to related parties, not necessarily liquid cash equivalents. I'll stick with standard Net Debt = 4,781,773,000 EUR. FFO/Net Debt = 1,062,464,000 / 4,781,773,000 = 0.2222... Let me calculate more precisely: 1,062,464,000 / 4,781,773,000 = 0.222189... So approximately 0.222 or 22.2%. Actually, I want to double-check my debt figures once more. Are there any other debt items? Looking at liabilities: - Noncurrent Provisions: 218,025,000 (not debt, these are provisions) - Other Noncurrent Liabilities: 399,628,000 (could include some debt-like items, but typically deferred tax or other non-financial liabilities) - Noncurrent Contract Liabilities: 5,452,905,000 (deferred revenue, not debt) - Trade And Other Current Payables: 1,849,980,000 (operational, not debt) - Current Tax Liabilities: 26,810,000 (not debt) - Other Current Liabilities: 632,259,000 (operational, not debt) So financial debt is just: - Other Noncurrent Financial Liabilities: 4,722,263,000 - Other Current Financial Liabilities: 619,418,000 Total: 5,341,681,000 Net debt: 4,781,773,000 FFO/Net debt ratio: 0.2222 Or if expressed as a percentage: 22.22%, but the ratio is typically expressed as a decimal or percentage. The question asks for "FFO / Net debt ratio" - this is typically expressed as a percentage (22.2%) or as a decimal (0.22). In credit analysis, it's often expressed as a percentage. Actually, looking at common reporting, FFO/Net Debt is often expressed as a percentage for readability, but sometimes as a multiple (e.g., 0.22x). I'll provide it as a decimal: 0.222 or about 22.2%. Wait, let me re-read the question - it says "ratio" so decimal form is appropriate. Let me also consider if I should use 2022 average or year-end. For annual report analysis at end of 2022, year-end net debt is standard. Final calculation: FFO = 1,062,464,000 EUR Net Debt = 4,781,773,000 EUR Ratio = 1,062,464,000 / 4,781,773,000 = 0.222189... ≈ 0.222 0.222