I need to calculate the FFO / Net debt ratio for 2022. Let me first understand what these components are. FFO (Funds From Operations) is typically calculated as: - Net income + Depreciation + Amortization + Deferred taxes + Other non-cash items - Or more commonly: Operating cash flow - Working capital changes For utility/energy companies, FFO is often calculated as: - Profit/Loss from continuing operations + Depreciation + Amortization + Net interest expense - Income taxes + Other adjustments Let me look at the data more carefully. For 2022 (period 2022-01-01 to 2023-01-01): From the cash flow statement approach, FFO can be estimated as: - Cash Flows From Used In Operating Activities: 1,260,000,000 EUR But let me also calculate it from the income statement: - Profit Loss from Continuing Operations: 412,000,000 EUR - Depreciation Expense: 491,000,000 EUR - Amortisation Expense: 233,000,000 EUR - Adjustments for Impairment: 10,000,000 EUR - Adjustments for Provisions: 92,000,000 EUR - Adjustments for Undistributed Profits of Associates: -2,000,000 EUR - Net Financial Interests: 90,000,000 EUR - Adjustments for Income Tax Expense: 344,000,000 EUR A common FFO calculation for credit analysis: FFO = Profit before tax + Interest expense + Depreciation + Amortization - Income taxes paid (or + tax expense) Or more standard for utilities: FFO = Operating cash flow before working capital changes Let me use: FFO = EBITDA - Interest paid + Interest received - Taxes paid (approximation) Or: FFO = Net income + Depreciation + Amortization + Net interest expense + Other non-cash items From the data, let me use the standard approach: FFO = Profit Loss From Continuing Operations + Depreciation + Amortization + Interest expense (net) + Other non-cash adjustments Actually, let me look at this more carefully. The standard FFO for credit rating agencies is: FFO = Net income from continuing operations + Depreciation + Amortization + Deferred taxes + Other non-cash items Or from cash flow: Operating cash flow + Changes in working capital (to exclude WC changes) From the cash flow data: Cash Flows From Used In Operating Activities: 1,260,000,000 EUR Working capital adjustments in operating cash flow: - Adjustments For Decrease Increase In Trade Account Receivable: -1,420,000,000 EUR - Adjustments For Increase Decrease In Trade Account Payable: 2,587,000,000 EUR - Adjustments For Decrease Increase In Inventories: -332,000,000 EUR - Other Adjustments For Noncash Items: -512,000,000 EUR Net working capital change = -1,420 + 2,587 - 332 - 512 = 323,000,000 EUR? Let me check: -1420 + 2587 = 1167; 1167 - 332 = 835; 835 - 512 = 323 So FFO (before working capital changes) = Operating cash flow - Working capital changes = 1,260,000,000 - 323,000,000? Actually, the standard approach is: FFO = Operating cash flow + Changes in working capital (if WC was a use of cash, add it back) Let me recalculate: Changes in WC from the adjustments: - Receivables increased: -1,420,000,000 (use of cash) - Payables increased: +2,587,000,000 (source of cash) - Inventories increased: -332,000,000 (use of cash) - Other non-cash: -512,000,000 Total working capital and other adjustments in operating cash flow = -1,420 + 2,587 - 332 - 512 = 323,000,000 Wait, let me verify by looking at the balance sheet changes: - Trade receivables: 4,680 - 3,291 = 1,389 increase (use of cash ~1,420 reported) - Trade payables: 5,524 - 2,894 = 2,630 increase (source of cash ~2,587 reported) - Inventories: 536 - 204 = 332 increase (use of cash, matches -332) So FFO = Operating cash flow - Working capital changes = 1,260,000,000 - 323,000,000? No, that's wrong. FFO is typically operating cash flow BEFORE working capital changes. So: FFO = Operating cash flow - (changes in receivables + changes in payables + changes in inventories + other WC) Actually, if operating cash flow INCLUDES working capital changes, then: FFO = Operating cash flow - Working capital changes (where WC changes are the items in the operating section) But wait - the operating cash flow already includes these working capital changes. So to get FFO (before WC changes), I need to add back the working capital uses and subtract the sources? No, let me think again. If operating cash flow = 1,260, and this includes: - WC changes (net): let's say -323 (meaning WC was a net use? No, 323 is positive meaning source?) Actually from the signs: - Receivables increase (negative for cash): -1,420 - Payables increase (positive for cash): +2,587 - Inventories increase (negative for cash): -332 - Other: -512 Sum: +323, meaning net positive impact on operating cash flow So if I want FFO before WC changes: 1,260 - 323 = 937? That doesn't seem right because payables increase is a source. Actually, standard FFO calculation from Moody's/S&P: FFO = Net income + Depreciation + Amortization + Deferred tax + Other non-cash items - Gain on asset sales Let me use: Net income (continuing): 412,000,000 + Depreciation: 491,000,000 + Amortization: 233,000,000 + Net interest: 90,000,000 (or finance costs 125 - finance income 35 = 90, matches) + Adjustments for impairment: 10,000,000 + Adjustments for provisions: 92,000,000 - Adjustments for undistributed profits: -2,000,000 + Income tax expense: 344,000,000 Wait, this gets complicated. Let me use a cleaner approach. Standard FFO for utilities = EBITDA - Cash interest - Cash taxes Or from the cash flow statement, a common approach is: FFO = Cash flow from operating activities + Changes in working capital (add back if working capital was a use, subtract if source) Actually, looking at this more practically, let me use: FFO = Net income + Depreciation + Amortization + Deferred taxes + Other non-cash charges From the income statement and adjustments: - Profit Loss: 448,000,000 (total including discontinued) - Or Profit Loss From Continuing Operations: 412,000,000 Let me use continuing operations: 412,000,000 + Depreciation: 491,000,000 + Amortization: 233,000,000 = 1,136,000,000 Then add back non-cash items and interest: + Net Financial Interests: 90,000,000 (this is paid in cash though) Actually, FFO typically includes interest paid as part of the financing, not operations. Let me check Moody's definition. Moody's FFO: Net income + Depreciation + Amortization + Deferred income taxes + Other non-cash items S&P FFO: Funds from operations = Net income + Depreciation + Amortization + Deferred taxes + Investment tax credit + Other non-cash items For this calculation, let me use: FFO = Profit Loss From Continuing Operations + Depreciation + Amortization + Adjustments for impairment + Adjustments for provisions + Adjustments for undistributed profits (negative) + Deferred tax changes From the balance sheet, deferred tax assets decreased: 424,000,000 - 363,000,000 = 61,000,000 decrease in asset = increase in FFO? Actually, decrease in deferred tax asset means deferred tax expense. Wait, let me look at the tax expense: Income Tax Expense is 344,000,000. Cash taxes paid are 201,000,000. So deferred tax portion = 344 - 201 = 143,000,000. Actually, a simpler and very common approach for FFO: FFO = Operating cash flow + Interest paid - Working capital changes (or before WC changes) Let me try: FFO = EBITDA + Interest income - Interest expense - Cash taxes? No. Let me use the most standard credit metric approach: FFO = Net income + Depreciation + Amortization + Deferred taxes + Other non-cash items = 412,000,000 (continuing) + 491,000,000 + 233,000,000 + (344,000,000 - 201,000,000) + 10,000,000 + 92,000,000 - 2,000,000 = 412 + 491 + 233 + 143 + 10 + 92 - 2 = 1,379,000,000 Hmm, but this includes discontinued operations? Let me check if I should use total net income. Total Profit Loss: 448,000,000 + Depreciation: 491,000,000 + Amortization: 233,000,000 + Deferred tax (expense - paid): 344 - 201 = 143,000,000 + Other non-cash: 10 + 92 - 2 = 100,000,000 FFO = 448 + 491 + 233 + 143 + 100 = 1,415,000,000? Actually, I realize I need to be more careful. Let me look at what "Net Financial Interests" means - it's 90,000,000. This is likely interest expense net of interest income (125 - 35 = 90). For FFO, we typically add back interest because FFO is before financing costs. But actually, standard FFO from net income already has interest deducted, so we add it back. Wait - Profit before tax (756) - tax (344) = continuing profit 412. This already includes interest expense of 90 net. So FFO = 412 + 491 + 233 + 90 (net interest) + non-cash items... Actually, let me check if depreciation and amortization are already in operating expenses. Yes, they are part of "Depreciation Amortization Provisions And Writedowns" of 818,000,000. Let me verify: Depreciation 491 + Amortization 233 + Impairment 10 + Provisions 92 - Undistributed profits 2 = 824? Hmm, 491+233+10+92-2 = 824, but the line item is 818. Close but not exact. Maybe other items. Actually 491 + 233 + 10 + 19 (prior year impairment) + 89 (prior year provisions) doesn't help. Let me just use: FFO = Operating cash flow + Interest paid + Taxes paid - Working capital changes? No. Standard approach: FFO = Cash flow from operating activities before changes in working capital. From operating cash flow of 1,260,000,000, I need to add back working capital changes that are uses and subtract sources. Working capital changes from operating section: - Receivables increase (use): -1,420,000,000 → add back +1,420,000,000 to remove this effect - Payables increase (source): +2,587,000,000 → subtract -2,587,000,000 to remove this effect - Inventories increase (use): -332,000,000 → add back +332,000,000 - Other non-cash: -512,000,000 → this might be non-cash, need to add back +512,000,000 Wait, "Other Adjustments For Noncash Items" of -512,000,000 - this is already a non-cash adjustment in the operating cash flow. So to get FFO before working capital, I need to: FFO = Operating cash flow - (receivables effect) - (payables effect) - (inventories effect)? No, let me think. Operating cash flow = Net income + non-cash adjustments + working capital changes So: Operating cash flow - working capital changes = Net income + non-cash adjustments = FFO Working capital changes in the cash flow = -1,420 + 2,587 - 332 = 835 (excluding other non-cash of -512) Wait, the -512 is "Other Adjustments For Noncash Items" - this is a non-cash item, not working capital. So: Operating cash flow = Net income + D&A + other non-cash + WC changes + interest + taxes... Actually, let me just calculate FFO as: FFO = Operating cash flow - Changes in working capital (receivables, payables, inventories) = 1,260,000,000 - (-1,420,000,000 + 2,587,000,000 - 332,000,000) = 1,260,000,000 - (835,000,000) = 425,000,000? That seems too low. Hmm, I think I'm confusing myself. Let me try another approach. Let me define: FFO = EBITDA - Cash taxes EBITDA = 1,505,000,000 (Gross Operating Income EBITDA) Cash taxes = 201,000,000 (Income Taxes Paid) FFO = 1,505 - 201 = 1,304,000,000? But this doesn't include interest. Actually, for credit ratios, FFO typically includes interest because it's "funds from operations" before financing. Wait, let me check: EBITDA is before interest and taxes. So: FFO = EBITDA - Cash taxes = 1,505 - 201 = 1,304 Or if using accrual taxes: 1,505 - 344 = 1,161 But standard FFO adds back interest because it's a financing cost. Since EBITDA is already before interest, this is correct. However, some definitions use: FFO = Net income + D&A + Deferred taxes + Other non-cash = 448 + 491 + 233 + 143 + other non-cash items What are other non-cash items? The adjustments: impairment 10, provisions 92, undistributed profits -2, gains on disposal -191 (this is a gain, so subtract), other -512. Hmm, the -512 is "Other Adjustments For Noncash Items" - this could include many things. Let me try a different standard approach. For European utilities, FFO is often: FFO = Operating cash flow + Changes in working capital Because operating cash flow already includes working capital changes, and FFO is before working capital changes. Wait, if operating cash flow INCLUDES working capital changes, then: FFO (before WC) = Operating cash flow - Working capital changes From balance sheet: - Receivables change: 4,680 - 3,291 = 1,389 increase (use of cash) - Payables change: 5,524 - 2,894 = 2,630 increase (source of cash) - Inventories change: 536 - 204 = 332 increase (use of cash) Net working capital change = -1,389 + 2,630 - 332 = 909 (source of cash) But cash flow statement shows: -1,420 + 2,587 - 332 = 835. Close to 909, difference due to FX or other. So FFO = 1,260 - 835 = 425,000,000? That seems wrong because it's too low. Actually wait - I need to check if the operating cash flow of 1,260 already includes or excludes working capital changes. Looking at typical cash flow statements, operating cash flow includes working capital changes. So if I want FFO before working capital changes, and operating cash flow includes +835 from working capital (net source), then: FFO = 1,260 - 835 = 425? No, that would mean FFO is lower, which is wrong. If working capital was a source of cash (+835), then operations generated cash even without true operations. So to get pure operational FFO, I need to subtract the working capital benefit: FFO = 1,260 - 835 = 425? That still seems wrong. Let me think differently. If company collected more payables (not paying them), that's not sustainable operational cash flow. So FFO excludes this. But 425 seems too low. Let me verify with another approach. Net income: 448 + D&A: 724 (491 + 233) + Deferred tax: 143 (344 - 201) + Other non-cash: let's say provisions 92, impairment 10, undistributed profits -2 = 100 + Interest expense: 90 (net) FFO = 448 + 724 + 143 + 100 + 90 = 1,505? That's exactly EBITDA! Yes! FFO before working capital changes and before cash taxes and interest = EBITDA essentially. Wait: Net income 448 + Interest 90 + Taxes 344 + D&A 724 + other non-cash 100 = 1,706? No. Let me check: 448 + 90 + 344 = 882 (approx EBIT? No, profit before tax is 756, plus discontinued 36 = 792?) Actually: Profit before tax 756 + Finance costs 125 - Finance income 35 = 846? Not matching. Let me just use: FFO = Net income + D&A + Interest + Deferred taxes + Other non-cash = 448 + 724 + 90 + 143 + 100 = 1,505 Hmm, 1,505 = EBITDA exactly! So FFO = EBITDA in this case? That happens when there are no other major non-cash items. Actually, let me verify: EBITDA = 1,505. EBITDA - D&A = EBIT = 1,505 - 724 = 781 EBIT - Interest = 781 - 90 = 691? But profit before tax is 756. Hmm, doesn't match. Wait, there are other items: Result from nonrecurring transactions 157, share of profit of associates 2, etc. Let me recalculate from EBITDA: EBITDA: 1,505 - D&A: 724 = EBIT: 781 + Result from nonrecurring: 157 + Finance income: 35 - Finance costs: 125 + Share of profit of associates: 2 = Profit before tax: 756? 781 + 157 + 35 - 125 + 2 = 850? Not 756. Hmm, the signs might be different. "Result From Nonrecurring Transactions" of 157 - is this positive or negative? It's listed as 157, and in 2021 it was 0. Looking at profit before tax: 756 vs 590 prior year. The 157 increase could explain part of it. Actually, let me check: Profit Loss From Operating Activities = 687. Then + Result from nonrecurring 157 = 844? Then + finance items = 756? 687 + 157 = 844. 844 - 88 (total financial balance) = 756. Yes! So "Total Financial Balance" is -88, which includes finance income 35, finance costs -125, share of profit 2, other 0 = -88. 35 - 125 + 2 = -88. Yes! So: Operating profit 687 + Nonrecurring 157 = 844. 844 - 88 = 756 = Profit before tax. And EBITDA = 687 + 818 (D&A, etc.) = 1,505. Yes, 687 + 818 = 1,505. Now, what is FFO? Standard definition from Moody's for utilities: FFO = Net income + Depreciation + Amortization + Deferred taxes + Other non-cash charges = 448 + 491 + 233 + (344 - 201) + other non-cash items Other non-cash items from cash flow adjustments: - Impairment: 10 - Provisions: 92 - Undistributed profits of associates: -2 - Gains on disposal of noncurrent assets: -191 (this is a gain, so it reduced net income, we need to add it back? No, we need to subtract gains) Wait, "Adjustments For Losses Gains On Disposal Of Noncurrent Assets" = -191,000,000. This means gains of 191. In net income, this gain is included, so to get FFO we subtract it. So: FFO = 448 + 491 + 233 + 143 + 10 + 92 - 2 - 191 = 1,224,000,000? Hmm, but I also need to add back interest because FFO is before financing. Net income includes interest expense of 90 (net). So add back 90. FFO = 1,224 + 90 = 1,314,000,000? Or is interest already handled? Actually, standard FFO from Moody's: Net income + D&A + Deferred taxes + Other non-cash. This starts with net income which already has interest deducted. So we don't add back interest for "Funds From Operations" - the operations generate funds to pay interest. Wait, but then FFO is used for "FFO/Net Debt" ratio, and net debt includes interest-bearing debt. So we want to see if FFO can cover the debt. FFO should be before interest if we're comparing to debt service. Actually, let me check standard practice. FFO/Net Debt is a leverage ratio. FFO typically includes interest paid because it's cash available to service debt. From S&P: "Funds from operations (FFO) = Net income from continuing operations + Depreciation + Amortization + Deferred income taxes + Other non-cash items" This starts with net income which has interest deducted. So FFO is AFTER interest. But then FFO/Debt ratio would be conservative. For "FFO interest coverage" we use FFO/Interest. For "FFO/Net Debt" we use FFO after interest to see how much goes to debt repayment. Actually, I think for FFO/Net Debt, the standard is to use FFO before interest, or EBITDA - Cash taxes, because the debt service includes interest. Let me use a simpler approach. From the cash flow statement, FFO is often approximated as: FFO = Operating cash flow + Changes in working capital - Interest paid - Taxes paid + Interest income? No. Actually, a very common approximation: FFO = Operating cash flow before working capital changes = Operating cash flow - (Increase in receivables - Increase in payables + Increase in inventories) From the cash flow statement, the working capital adjustments sum to: -1,420 + 2,587 - 332 = 835 (excluding other non-cash of -512) So FFO = 1,260 - 835 = 425? Still seems wrong. Wait, I need to check: Does the 1,260 operating cash flow include or exclude these working capital items? Looking at the structure, "Cash Flows From Used In Operating Activities" is the final line, so it includes all adjustments. Let me verify by building from net income: Net income: 448 + D&A: 724? No, the adjustments show depreciation 491, amortization 233, total 724 + Impairment: 10 + Provisions: 92 - Undistributed profits: -2 - Gains on disposal: -191 + Other non-cash: -512? This is "Other Adjustments For Noncash Items" = -512 Subtotal: 448 + 491 + 233 + 10 + 92 - 2 - 191 - 512 = 569? Then add working capital: - Receivables: -1,420 + Payables: +2,587 - Inventories: -332 = +835 569 + 835 = 1,404? Not matching 1,260. Missing items. Also need to add: + Interest paid: 75 (classified as operating) + Income taxes paid: -201? Or is it a refund? "Income Taxes Paid Refund" = 201, likely paid - Dividends paid: 302? No, dividends are financing Hmm, the "Interest Paid Classified As Operating Activities" = 75. Is this already in net income? Yes, interest expense is in net income. But in cash flow, we add back the non-cash accrual and subtract the cash paid. Actually, looking at the adjustments: "Net Financial Interests" = 90. This is likely the P&L interest. "Interest Paid Classified As Operating Activities" = 75. The difference 15 could be accrual/capitalized interest. Let me try: Start with Profit before tax: 756 + D&A: 491 + 233 = 724 + Impairment: 10 + Provisions: 92 - Undistributed profits: -2 - Gains on disposal: -191 + Other non-cash: -512? = 756 + 724 + 10 + 92 - 2 - 191 - 512 = 877? Then - Interest paid 75 - Taxes paid 201 - Dividends? No dividends are separate. 877 - 75 - 201 = 601? Then working capital 835 = 1,436? Not matching. I think the "Other Adjustments For Noncash Items" = -512 includes many things, possibly offsetting. Let me try a different approach. Use the direct definition from credit agencies: Moody's FFO = Net income + Minority interest + D&A + Deferred taxes + Other non-cash - Gain on asset sales + Interest expense = 448 + (-47 minority? No, minority is negative 47, meaning loss attributable to minority) + 724 + 143 + 100 - 191 + 90 Wait, "Profit Loss Attributable To Noncontrolling Interests" = -47,000,000. This is a loss, so minority interests are negative. Net income 448 = Parent 401 + Minority 47? No, 401 + (-47) = 354? That doesn't work. Actually: Profit Loss = 448. Profit Loss Attributable To Owners Of Parent = 401. Profit Loss Attributable To Noncontrolling Interests = -47. So 401 + (-47) = 354 ≠ 448. Hmm, that doesn't work unless I'm reading wrong. Wait: "Profit Loss Attributable To Noncontrolling Interests" = -47000000. The negative means... loss? But then 401 - 47 = 354, not 448. Unless the 448 is from continuing 412 + discontinued 36 = 448. And 401 is parent from continuing + discontinued. Let me check: "Profit Loss From Continuing Operations" = 412. "Profit Loss From Discontinued Operations" = 36. Total 448. "Profit Loss Attributable To Owners Of Parent" = 401. This should be total. But 401 ≠ 448. Unless minority interest in continuing is different. "Profit Loss Attributable To Noncontrolling Interests" = -47. This might mean the minority share of total profit is negative (i.e., minority has losses). So: Parent share 401 + Minority share (-47) = 354? But total profit is 448. This doesn't add up. Hmm, wait. Let me re-read: "Profit Loss Attributable To Noncontrolling Interests" 2022-01-01 - 2023-01-01: -47000000 EUR. Actually, this might be: the amount attributable to noncontrolling interests is -47, meaning a loss. But total profit is 448. So where does the rest go? Unless there's other comprehensive income or something. Or the 401 is from continuing operations only? "Profit Loss Attributable To Owners Of Parent" = 401. And "Result Of The Year" = 401. This is the balance sheet equity item, which matches the income statement attribution. Actually, I think "Profit Loss" of 448 is the total, and "Profit Loss Attributable To Owners Of Parent" of 401 + "Profit Loss Attributable To Noncontrolling Interests" of (-47) should equal 448. But 401 + (-47) = 354 ≠ 448. Unless there's a sign convention where negative means... hmm, let me check 2021: Profit Loss 550 = Parent 504 + Minority (-46)? 504 - 46 = 458 ≠ 550. This doesn't work either. 504 + 46 = 550! So maybe the minority interest is reported as negative but actually means positive? Or the label is confusing. Actually, looking at equity: "Noncontrolling Interests" = 568,000,000. This is positive equity. The "Profit Loss Attributable To Noncontrolling Interests" = -47 might mean that noncontrolling interests had a loss of 47, reducing their equity. But then 401 (parent profit) + (-47) (minority loss) = 354, not 448. The difference is 94. Wait, let me check comprehensive income: "Comprehensive Income" = 469. "Comprehensive Income Attributable To Owners Of Parent" = 422. "Comprehensive Income Attributable To Noncontrolling Interests" = -47. 422 - 47 = 375 ≠ 469. Hmm, 422 + 47 = 469! So maybe when they say "Attributable To Noncontrolling Interests" = -47, they mean the noncontrolling interests' share reduced comprehensive income? No, the math works if it's actually +47 but written as -47 for some reason. Actually, I think I misread the sign. Let me look: "Profit Loss Attributable To Noncontrolling Interests" 2022-01-01 - 2023-01-01: -47000000 EUR The value is -47. But in the context, this might mean that the noncontrolling interests' share of profit is negative, i.e., they have a loss. But then the total doesn't add up. Unless... the 448 is profit from continuing and discontinued, but the attribution splits differently. Or there are other items. Let me not get bogged down. For FFO, I'll use a practical approach. From the cash flow statement, a common European utility FFO is: FFO = EBITDA - Cash taxes + Interest received - Interest paid (or + Net interest) Or: FFO = Operating cash flow before working capital changes + Interest received Let me calculate FFO as: FFO = EBITDA + Interest income - Cash taxes = 1,505 + 35 - 201 = 1,339,000,000 Or with accrual taxes: 1,505 + 35 - 344 = 1,196,000,000 Actually, standard is: FFO = Net income + D&A + Interest + Deferred taxes + Other non-cash = 448 + 724 + 90 + 143 + 100 - 191 (gain on sale) = 1,314,000,000 Let me use 1,314 or approximately 1,300. Now for Net Debt. Net Debt = Total financial liabilities - Cash and cash equivalents. Financial liabilities: - Other Noncurrent Financial Liabilities: 5,867,000,000 - Other Current Financial Liabilities: 1,022,000,000 - Current portion of long-term debt? Not separately stated. Total financial liabilities = 5,867 + 1,022 = 6,889,000,000 Wait, are there other financial liabilities? Let me check the balance sheet: Noncurrent liabilities: 7,214 total. This includes: - Other Noncurrent Financial Liabilities: 5,867 - Noncurrent Provisions For Employee Benefits: 248 - Other Longterm Provisions: 729 - Other Noncurrent Liabilities: 370 Sum: 5,867 + 248 + 729 + 370 = 7,214. Yes. Current liabilities: 9,686 total (excluding held for sale). This includes: - Trade And Other Current Payables To Trade Suppliers: 5,524 - Other Current Nonfinancial Liabilities: 3,006 - Other Current Financial Liabilities: 1,022 - Current Tax Liabilities Current: 134 Sum: 5,524 + 3,006 + 1,022 + 134 = 9,686. Yes. So total financial debt = 5,867 + 1,022 = 6,889,000,000 EUR Cash and Cash Equivalents = 2,584,000,000 EUR Net Debt = 6,889 - 2,584 = 4,305,000,000 EUR Wait, are there other current financial assets that should be deducted? "Other Current Financial Assets" = 14,000,000. Small, can ignore or include. Also "Other Noncurrent Financial Assets" = 70,000,000. These might be long-term investments, not readily available cash. Net Debt = Total debt - Cash - Near cash items = 6,889 - 2,584 = 4,305,000,000 Or if we include other current financial assets: 6,889 - 2,584 - 14 = 4,291,000,000 Now, FFO / Net Debt ratio: If FFO = 1,314, then 1,314 / 4,305 = 0.305 or 30.5% If FFO = 1,260 (operating cash flow), then 1,260 / 4,305 = 0.293 or 29.3% If FFO = EBITDA - Cash taxes = 1,505 - 201 = 1,304, then 1,304 / 4,305 = 0.303 or 30.3% Let me use a more careful FFO calculation. From S&P/Moody's for European utilities: FFO = Net income + Minority interest (in earnings, not loss) + D&A + Deferred taxes + Other non-cash - Gain on asset sales Net income: 448 Minority interest: The minority share of profit is -47 (a loss). Do we add this back? If minority has a loss, it increases parent profit. For FFO, we want total firm FFO. Since -47 is already reflected in net income (as a negative, meaning it added to parent profit), we need to think carefully. Actually, if net income = parent 401 + minority (-47) = 354? That doesn't equal 448. So my understanding is wrong. Let me try: Maybe "Profit Loss Attributable To Noncontrolling Interests" = -47 means the noncontrolling interests are allocated a loss of 47, but this is already deducted from total profit? No, profit is positive. Actually, I think the issue is that 448 is total comprehensive or something else. Let me just use 401 (parent profit) + 47 (minority, taking absolute or understanding the sign) = 448? 401 + 47 = 448! Yes! So "Profit Loss Attributable To Noncontrolling Interests" = -47 might be a data formatting issue, or it means the noncontrolling interests' share reduced the total (i.e., they had losses that reduced consolidated profit). But 401 + 47 = 448, so if minority had +47 profit, total is 448. Wait, but the line says -47. Unless... in 2021: 504 + 46 = 550. Yes! So the minority interest is positive 46 or 47, but written as negative because... of the formula structure? Actually, looking at equity: "Profit Loss" "Noncontrolling Interests Member" 2022-01-01 - 2023-01-01: 47000000 EUR. This is positive 47! So the "Profit Loss Attributable To Noncontrolling Interests" = -47 is actually showing -47, but "Profit Loss" "Noncontrolling Interests Member" = +47. These are different concepts. The first is the attribution in the income statement (negative means loss), the second is the equity movement (positive means increase). So minority share of profit is +47, not -47. The -47 in "Attributable" might be a sign convention or I misread. Actually, re-reading: "Profit Loss Attributable To Noncontrolling Interests" 2022-01-01 - 2023-01-01: -47000000 EUR Hmm, it says -47. But then 401 + (-47) = 354 ≠ 448. Unless there's also "Profit Loss Attributable To Owners Of Parent" from discontinued operations separately. Actually, "Profit Loss From Discontinued Operations" = 36. Maybe parent gets all of this? 401 (parent total) = parent continuing 365 + parent discontinued 36? And minority gets -47 from continuing (a loss)? 365 + 36 = 401. And 365 + (-47) = 318? No, total continuing is 412. 365 + (-47) = 318 ≠ 412. I'm overcomplicating. Let me use: Total profit 448 + D&A 724 + Interest 90 + Deferred tax 143 - Gain 191 + Other non-cash 100 = 1,414? Or simpler: FFO = Operating cash flow 1,260 + Interest paid 75 + Tax paid 201 - Working capital benefit 835 = 701? No. Let me try yet another approach. FFO is often approximated as: FFO = Cash flow from operating activities + Interest paid + Taxes paid - Working capital changes (inventories, receivables, payables) = 1,260 + 75 + 201 - 835 = 701? Still seems low. Or: FFO = EBIT + D&A - Cash taxes = (756 + 90 interest) + 724 - 201 = 846 + 724 - 201 = 1,369 Or using profit before tax + interest + D&A - cash taxes: 756 + 90 + 724 - 201 = 1,369 This seems reasonable. FFO = 1,369,000,000. Net Debt = 4,305,000,000. FFO / Net Debt = 1,369 / 4,305 = 0.318 or 31.8% But wait, I should check if there are other financial assets to subtract. "Other Current Financial Assets" = 14. "Other Noncurrent Financial Assets" = 70. These might include loans, derivatives, etc. Not all are "cash-like." If we include only cash: Net debt = 6,889 - 2,584 = 4,305. Actually, let me check if "Other Noncurrent Financial Assets" of 70 includes equity investments. "Investment Accounted For Using Equity Method" = 33. "Other Noncurrent Financial Assets" = 70. These are likely not cash-like. So Net Debt = 6,889 - 2,584 = 4,305. But wait - is there any cash in "Other Current Nonfinancial Assets" or other items? Probably not. Let me also check 2022 vs 2023 dates. The balance sheet is at 2023-01-01 and 2022-01-01. The income statement is for 2022-01-01 to 2023-01-01. So the 2022 data uses beginning of 2023 for balance sheet = end of 2022. For Net Debt at end of 2022, I use 2023-01-01 balance sheet: 6,889 debt - 2,584 cash = 4,305. For FFO for 2022, I use the period 2022-01-01 to 2023-01-01. Now, let me recalculate FFO more carefully using the standard Moody's formula: FFO = Net income + Minority interest + D&A + Deferred income taxes + Other non-cash items Net income: 448,000,000 Minority interest: +47,000,000 (the positive share, based on equity movement) D&A: 724,000,000 (491 + 233) Deferred taxes: 143,000,000 (344 expense - 201 paid) Other non-cash: This includes provisions 92, impairment 10, undistributed profits -2, gains on disposal -191, other -512. But many of these are already in net income or D&A. Actually, the "Other Adjustments For Noncash Items" = -512 is a catch-all. Let me see what this includes. From the cash flow statement, total adjustments to reconcile net income to operating cash flow: - D&A: 491 + 233 = 724 - Impairment: 10 - Provisions: 92 - Undistributed profits: -2 - Gains on disposal: -191 - Other non-cash: -512 - Interest paid (operating): 75? Or is this a use of cash? - Tax paid: 201? Or is this a use? - Dividends paid: 302? This is usually financing, but here classified as operating? Wait, "Dividends Paid Classified As Operating Activities" = 302. This is unusual - dividends are normally financing. If included in operating, we need to add back for FFO. Let me try to reconcile: Net income: 448 + D&A: 724 + Impairment: 10 + Provisions: 92 - Undistributed profits: -2 - Gains on disposal: -191 - Other non-cash: -512 = 569 Then working capital: - Receivables: -1,420 + Payables: +2,587 - Inventories: -332 = +835 569 + 835 = 1,404. But operating cash flow is 1,260. Difference of 144. Then interest paid 75 + tax paid 201 + dividends paid 302 = 578? No, these are uses of cash. 1,404 - 578 = 826? Not 1,260. Actually, I think "Interest Paid Classified As Operating Activities" and "Income Taxes Paid" and "Dividends Paid Classified As Operating Activities" are already included in the operating cash flow of 1,260. They are likely adjustments to get from accrual to cash. Standard cash flow: Net income → add back non-cash → adjust for working capital → adjust for interest/tax/dividends paid → = Operating cash flow. But the interest paid and tax paid are already deducted in net income (interest expense, tax expense). So in cash flow, we add back the expense and subtract the cash paid? Or just adjust for timing differences? Actually, for interest: Net income includes interest expense of 90 (accrual). Cash flow needs to show interest paid of 75. So adjustment = +90 (add back expense) - 75 (subtract paid) = +15? Or if interest expense is already in operating activities, we just have -75 for cash paid. I think the cash flow statement shown uses the indirect method starting from net income, with adjustments for non-cash items and working capital, and then separate sections for interest, taxes, dividends paid. Let me try: Start: 448 + Non-cash adjustments: 724 + 10 + 92 - 2 - 191 - 512 = 121? = 569 + Working capital: 835 = 1,404 - Interest paid: 75? But this might already be in the 1,260 or need to be subtracted - Tax paid: 201? - Dividends paid: 302? 1,404 - 75 - 201 - 302 = 826? Not 1,260. Alternatively, maybe the 1,260 is before these payments, and the interest/tax/dividends are shown as additional information. But they're listed under "Cash Flows From Used In Operating Activities" section. Actually, looking more carefully, the operating cash flow of 1,260 likely INCLUDES the interest paid, tax paid, and dividends paid (since they're classified as operating). So: Operating cash flow 1,260 = Net income 448 + D&A 724 + other non-cash (10+92-2-191-512= -603) + working capital 835 - interest paid? No, interest is already in net income. Hmm: 448 + 724 - 603 + 835 = 1,404. Then 1,404 - 144 = 1,260. What's 144? Maybe: 1,404 - 75 (interest paid, but already in net income as 90 expense, so net +15?) - 201 (tax paid, but tax expense is 344, so +143 deferred) + 302 (dividends, not in net income)? This is getting messy. Let me just use a standard approximation. For utility companies, a common and simple FFO is: FFO = EBITDA - Cash taxes + Interest income (or - Net interest paid) = 1,505 - 201 + 35 - 125 = 1,214? Or = 1,505 - 201 = 1,304 (if we don't adjust interest because it's financing) Actually, for FFO/Net Debt, we want FFO available to service debt, so: FFO = EBITDA - Cash taxes = 1,505 - 201 = 1,304 Or more precisely, including working capital benefits that are sustainable: FFO = Operating cash flow + Interest paid - Working capital changes (if one-time) But working capital changes might be sustainable for a growing utility. Let me use: FFO = 1,260,000,000 (operating cash flow) + 75,000,000 (interest paid, classified as operating) = 1,335,000,000? No, interest paid is already in operating cash flow. Actually, if operating cash flow of 1,260 already includes paying interest of 75 and taxes of 201, then FFO before these would be higher. But FFO is typically after these operating/financing items. Standard Moody's FFO: Net income + D&A + Deferred taxes + Other non-cash. This is after interest expense (in net income) and after tax expense (in net income), but before working capital changes. = 448 + 724 + 143 + 100 - 191 = 1,324? (where 100 = 10+92-2, and -191 is gain on sale) Or = 448 + 724 + 143 + 10 + 92 - 2 - 191 = 1,224 Hmm, I keep getting different numbers. Let me settle on approximately 1,300. Actually, let me use the most standard formula for European utilities from credit rating agencies: FFO = EBIT + D&A - Cash taxes = (756 + 90) + 724 - 201 = 1,369 Or: FFO = Profit before tax + Interest + D&A - Cash taxes = 756 + 90 + 724 - 201 = 1,369 Net Debt = 4,305 FFO / Net Debt = 1,369 / 4,305 = 0.318 Or using EBITDA - Cash taxes = 1,505 - 201 = 1,304: 1,304 / 4,305 = 0.303 Or using Operating CF = 1,260: 1,260 / 4,305 = 0.293 I think the most standard is around 0.30 or 30%. But let me check if I should use 2022 beginning or end debt. For 2022 performance, we typically use end-of-period debt or average debt. The balance sheet at 2023-01-01 is end of 2022. Debt at 2022-01-01: Financial liabilities 2022-01-01: - Other Noncurrent Financial Liabilities: 4,322 - Other Current Financial Liabilities: 746 Total: 5,068 Cash 2022-01-01: 964 Net Debt 2022-01-01: 5,068 - 964 = 4,104 Average Net Debt = (4,305 + 4,104) / 2 = 4,204.5 Or just use end of period: 4,305. For FFO/Net Debt, it's common to use end-of-period net debt. Let me recalculate with more precision. First, let me get a better FFO. From the equity statement, I can see the comprehensive income and changes. But let me use cash flow approach. Actually, I realize "Cash Flows From Used In Operating Activities" of 1,260 is the standard operating cash flow. For FFO, credit agencies often use: FFO = Operating cash flow + Changes in working capital + Changes in provisions + Other non-cash Or simply: FFO = Operating cash flow before working capital changes. From the adjustments: - Receivables: -1,420 (use) - Payables: +2,587 (source) - Inventories: -332 (use) Net working capital: +835 (source) If operating cash flow of 1,260 includes this +835 source, then before working capital: FFO = 1,260 - 835 = 425? That can't be right because it's too low. Wait, I think I have the sign wrong. If working capital provided cash (+835), then operations without working capital would be lower. So FFO = 1,260 - 835 = 425? That means core operations generated less cash, and working capital management provided the rest. But 425 seems very low compared to EBITDA of 1,505. Let me check: EBITDA 1,505 - Cash taxes 201 - Interest paid 75 = 1,229. Then - Working capital use? No, working capital was a source. Hmm, let me think about this differently. If payables increased by 2,587, that's a source of cash. But it's not sustainable indefinitely. So FFO excludes this. Core FFO = 1,260 - 2,587 (remove payable benefit) + 1,420 (remove receivable use) + 332 (remove inventory use) = 425. But this also removes the "Other Adjustments For Noncash Items" of -512, which might include non-cash items that should stay in FFO. Actually, the -512 is labeled "Other Adjustments For Noncash Items" - this is a non-cash adjustment, not working capital. So: Operating cash flow 1,260 = Net income 448 + Non-cash adjustments (724 + 10 + 92 - 2 - 191 - 512 = 121) + Working capital (-1,420 + 2,587 - 332 = 835) + Other items? 448 + 121 + 835 = 1,404. Then 1,404 - 1,260 = 144 difference. This 144 might be interest paid, tax paid, dividends paid, or other. Actually: 75 + 201 = 276. Not 144. 75 + 201 - 302 = -26. Not 144. Maybe the -512 includes some working capital or other items that offset. Let me just accept that operating cash flow is 1,260 and work with approximations. For a quick and commonly used FFO: FFO ≈ Operating cash flow + Interest paid (if not in operating) - Working capital changes But interest paid of 75 IS classified as operating. So it's already in 1,260. FFO ≈ Operating cash flow - Working capital changes + Interest paid? No, interest is already included. Let me try: FFO = EBITDA - Cash taxes = 1,505 - 201 = 1,304. This is clean and standard. Net Debt = 4,305. Ratio = 1,304 / 4,305 = 0.303. Or if I include interest income and expense: FFO = EBITDA - Net interest - Cash taxes? No, FFO is before debt service. Actually, for FFO/Net Debt, we want to see if the company generates enough funds to cover its net debt. FFO should be after operating costs but before financing costs. So: FFO = EBIT + D&A - Cash taxes = 687 + 157 (nonrecurring?) + 724 - 201? Wait, operating profit 687 includes nonrecurring? Let me check: "Profit Loss From Operating Activities" = 687. This is EBIT? Or EBITDA minus D&A? Actually: EBITDA 1,505 - "Depreciation Amortization Provisions And Writedowns" 818 = 687. Yes! So 687 is operating profit (EBIT). Then EBIT 687 + Nonrecurring 157 = 844? Then financial items = -88, tax = 344, continuing profit = 412. So EBIT = 687. This includes nonrecurring? The 157 is "Result From Nonrecurring Transactions" and it's separate. So EBIT from continuing/recurring is 687 - 157? Or 687 includes operations and the 157 is extra? Actually: "Profit Loss From Operating Activities" 687 + "Result From Nonrecurring Transactions" 157 = 844. Then + Financial balance -88 = 756 PBT. So 687 is operating, 157 is nonrecurring. Total 844 is some kind of EBIT. For FFO, we usually include nonrecurring if they're cash, or exclude if non-cash. The 157 is likely a gain (positive). Is it cash or non-cash? Looking at "Adjustments For Losses Gains On Disposal Of Noncurrent Assets" = -191, this is a gain of 191. But the nonrecurring is 157, not 191. So maybe different items. Actually, the -191 adjustment is to remove gains from cash flow. And "Disposal Of Fixed Assets And Shareholdings" = 413 cash inflow in investing. So gain = 413 - book value. The gain in P&L might be 157 (nonrecurring) + part of operating? Or the 157 includes the 191 gain and other losses? This is getting too detailed. Let me use a practical FFO estimate. From credit rating practice for A2A specifically (I recall A2A is an Italian multi-utility), FFO is typically calculated as: FFO = Net income + D&A + Net interest + Deferred taxes + Other non-cash - Gain on asset sales = 448 + 724 + 90 + 143 - 191 + other = 1,314 approximately Or using operating cash flow approach: FFO = Operating cash flow 1,260 + Interest paid 75 + Tax paid 201 - Working capital source 835? No. Let me try: FFO = Operating cash flow - Working capital changes + Interest paid? = 1,260 - 835 + 75 = 500? No. I think the cleanest is: FFO = EBITDA - Cash taxes = 1,505 - 201 = 1,304. Or if we want to be more conservative: FFO = Operating cash flow = 1,260. Let me check with net debt calculation again. Are there lease liabilities? "Payments Of Lease Liabilities Classified As Financing Activities" = 11. So there are leases. Are they in debt? "Other Noncurrent Financial Liabilities" might include leases. "Other Current Financial Liabilities" might include lease current portion. For a precise net debt, we might need to add leases if not already in financial liabilities. But they seem to be included in the 5,867 and 1,022. Actually, looking at financing activities: "Payments Of Lease Liabilities Classified As Financing Activities" = 11. And "Total Changes In Financial Liabilities" = 1,503. This includes borrowings, repayments, lease payments, other changes. Proceeds from borrowings: 4,339 Repayments: -2,779 Lease payments: -11 Other changes: -46 Total: 1,503 So lease liabilities are part of the debt structure. Net Debt = 6,889 - 2,584 = 4,305. Now, what about the 2021 balance? "Cash And Cash Equivalents" 2021-01-01: 1,012. But we need 2022-01-01 for beginning of 2022, which is 964. Actually, the period is 2022-01-01 to 2023-01-01, so beginning cash is 2022-01-01 = 964, ending is 2023-01-01 = 2,584. For Net Debt at end of 2022 = 2023-01-01: 4,305. For FFO for 2022: Let me use 1,304 (EBITDA - Cash taxes) or 1,260 (Operating CF). I'll go with FFO = 1,304,000,000 as a standard approximation. FFO / Net Debt = 1,304 / 4,305 = 0.3029 or about 0.30. But let me also consider if we should use average net debt or end net debt. For leverage ratios, end-of-period is common. Actually, I want to double-check my FFO. Let me use the exact Moody's formula: FFO = Net income + Minority interest + D&A + Deferred income taxes + Other non-cash items Net income: 448,000,000 Minority interest: 47,000,000 (positive, from equity movement) D&A: 724,000,000 Deferred taxes: 143,000,000 (344 - 201) Other non-cash: Need to identify. From adjustments: impairment 10, provisions 92, undistributed profits -2, other -512. But "other -512" is vague. If I exclude other -512 (as it might be working capital or other): Other non-cash = 10 + 92 - 2 - 191 (gain on sale) = -91 FFO = 448 + 47 + 724 + 143 - 91 = 1,371,000,000 Or if gain on sale is not in other non-cash but separate: FFO = 448 + 47 + 724 + 143 + 10 + 92 - 2 = 1,462,000,000? Then subtract gain 191 = 1,271? Hmm. Let me try yet another approach. Look at "Free Cash Flow" = 118,000,000. Free Cash Flow = Operating cash flow - Capital expenditures - Acquisitions + Disposals Operating cash flow: 1,260 - Purchase of PPE: 856 - Purchase of intangibles: 384 - Acquisitions: 497 + Contribution from acquisitions: 180? (this is cash acquired) + Disposals: 413 + Dividends received: 2 = 1,260 - 856 - 384 - 497 + 180 + 413 + 2 = 118. Yes! Matches. So FFO is before capex. FFO = Operating cash flow + Working capital changes (if we want to exclude them)? No, operating cash flow already includes working capital. Actually, FFO = Operating cash flow - Working capital changes (to exclude them) = 1,260 - 835 = 425? That still seems wrong. Wait, I think I finally see the issue. The "Adjustments For Decrease Increase In Trade Account Receivable" = -1,420 means receivables increased, which is a USE of cash. In the cash flow statement, this is subtracted from net income. So: If I want to REMOVE working capital effects from operating cash flow, and working capital provided +835 net cash, then: FFO (before working capital) = Operating cash flow - Working capital contribution = 1,260 - 835 = 425. But this assumes working capital was a source. Let me verify: -1,420 (receivables use) + 2,587 (payables source) - 332 (inventories use) = +835. Yes, net source. So core operations generated 425, and working capital management provided 835, for total operating cash flow of 1,260. But 425 seems too low. Is it possible? EBITDA is 1,505. Cash taxes 201. Interest paid 75. 1,505 - 201 - 75 = 1,229. Then working capital +835 = 2,064? No, that's not right. Actually, EBITDA 1,505 includes non-cash items. Cash from operations before working capital should be roughly: EBITDA - Cash taxes - Cash interest = 1,505 - 201 - 75 = 1,229. Then working capital +835 = 2,064? But operating cash flow is 1,260. Big difference. Unless... EBITDA includes non-cash revenue or expenses. Or my calculation is wrong. Let me check: 1,505 EBITDA. D&A 724. EBIT 781? But operating profit is 687. Difference is 94. Hmm, 1,505 - 818 (D&A etc) = 687. Yes. Then EBIT 687 - Interest 90 = 597? But PBT is 756. Because there's nonrecurring 157 and other items. 687 + 157 - 88 (net financial) = 756. Yes. So EBIT from operations = 687. Plus nonrecurring 157 = 844. Minus net financial 88 = 756 PBT. Cash from operations: Start from net income 448. Add back D&A 724. Add back non-cash items. Subtract working capital uses. 448 + 724 = 1,172. Then + other non-cash - working capital = 1,260. So other - working capital = 88. Working capital is +835. So other = 835 - 88 = 747? Or other non-cash = -747? From adjustments: 10 + 92 - 2 - 191 - 512 = -603. Plus interest paid 75? Plus tax paid 201? Plus dividends 302? -603 + 75 + 201 + 302 = -25? Not matching. I think the issue is that "Interest Paid Classified As Operating Activities" and "Income Taxes Paid" and "Dividends Paid Classified As Operating Activities" are NOT in the reconciliation from net income to operating cash flow. They're supplementary disclosures. Actually, looking at typical IFRS cash flow statements, interest paid can be classified as operating, financing, or investing. Here it's operating. Taxes paid are operating. Dividends paid are normally financing, but here they're classified as operating (unusual). So the reconciliation is: Net income 448 + Adjustments for non-cash items: D&A 724, impairment 10, provisions 92, undistributed profits -2, gains -191, other -512. Subtotal: 121. = 569 + Working capital changes: 835 = 1,404 - Interest paid: 75? (or is this already in net income?) - Taxes paid: 201? (or is the 344 tax expense already adjusted?) - Dividends paid: 302? 569 + 835 = 1,404. Then 1,404 - 75 - 201 - 302 = 826? But actual is 1,260. Alternatively, maybe interest paid and taxes paid are already reflected in the "Other Adjustments For Noncash Items" or elsewhere. Actually, I think the 1,260 operating cash flow is the final number after all these items. And the interest paid, tax paid, dividends paid are just breakdowns of where cash went. So: 1,260 = Net cash from operating activities. This is after paying interest 75, taxes 201, and dividends 302? That would mean before these, cash was 1,260 + 75 + 201 + 302 = 1,838? Then minus working capital 835 = 1,003? Not matching net income + D&A. I'm going in circles. Let me just use a standard approximation for FFO. For European utilities, a common FFO definition from credit metrics: FFO = EBITDA + Net financial income - Cash taxes = 1,505 + 35 - 125 - 201 = 1,214? Or = 1,505 - 201 = 1,304 (if we don't adjust interest because it's financing) Actually, the standard is: FFO = EBIT + D&A - Cash taxes (this gives funds from operations before interest) = 687 + 724 - 201 = 1,210? But this excludes nonrecurring. Or including nonrecurring: 844 + 724 - 201 = 1,367. I'll use FFO ≈ 1,300,000,000 as a reasonable estimate. Net Debt = 4,305,000,000. FFO / Net Debt = 1,300 / 4,305 = 0.302. Or more precisely with FFO = 1,304: 1,304 / 4,305 = 0.3029. Let me also check if I should use 2021 net debt or average. For 2022 performance, using end-2022 net debt (which is 2023-01-01 balance) is standard. Actually, I want to verify my net debt once more. Are there any other financial liabilities? Looking at the balance sheet: - Noncurrent liabilities: 7,214 total - Financial: 5,867 - Employee benefits: 248 - Provisions: 729 - Other: 370 - Current liabilities: 9,686 total - Trade payables: 5,524 - Other nonfinancial: 3,006 - Financial: 1,022 - Tax: 134 Total debt = 5,867 + 1,022 = 6,889. Yes. Cash = 2,584. Net debt = 4,305. Is there any other cash-like item? "Other Current Financial Assets" = 14. "Current Tax Assets Current" = 35. These might be recoverable but not immediately cash-like. If we include "Other Current Financial Assets" as near-cash: Net debt = 6,889 - 2,584 - 14 = 4,291. FFO / Net Debt = 1,304 / 4,291 = 0.304. Very similar. I'll use 4,305 for net debt. Final calculation: FFO / Net Debt = 1,304 / 4,305 = 0.3029 ≈ 0.30 or 30.3%. But wait - I want to check one more thing. Should FFO include or exclude discontinued operations? "Profit Loss From Discontinued Operations" = 36. This is included in net income 448. For FFO, we typically use continuing operations. So: FFO from continuing = 412 + 724 + 90 + 143 + other non-cash - gain 191 = 1,278? Approximately. Or 412 + 724 + 143 + 100 - 191 = 1,188? Plus interest 90 = 1,278. Then FFO / Net Debt = 1,278 / 4,305 = 0.297. Including discontinued: +36 = 1,314. 1,314 / 4,305 = 0.305. I'll use total FFO including discontinued as it's all part of the group's operations in 2022. So FFO ≈ 1,300. Ratio ≈ 0.30. Actually, let me try to be more precise. I'll use: FFO = Operating cash flow 1,260 + Interest paid 75 - Working capital source 835? No. Let me use: FFO = EBITDA 1,505 - Cash taxes 201 = 1,304. This is clean, standard, and doesn't depend on working capital volatility. Net Debt = 4,305. Ratio = 1,304 / 4,305 = 0.3029. I'll round to 0.30 or express as 30.3%. But the question asks for a ratio, so 0.303 or 30.3%. Actually, looking at the format "FFO / Net debt ratio", this is often expressed as a percentage or decimal. I'll provide as decimal. Wait, I should double-check if "Net Debt" might include something else. Sometimes net debt includes: - Total financial liabilities - Less: Cash and cash equivalents - Less: Current financial assets - Less: Noncurrent financial assets (if liquid) If we include "Other Current Financial Assets" = 14 and maybe part of "Other Noncurrent Financial Assets" = 70: Net Debt = 6,889 - 2,584 - 14 - 70 = 4,221? Or just -14 = 4,291. The 70 of "Other Noncurrent Financial Assets" likely includes loans to associates, derivatives, etc. Not liquid. I'll use Net Debt = 4,305 (strict definition: debt minus cash). Or if more comprehensive: 6,889 - 2,584 - 14 = 4,291. Difference is small. I'll use 4,305. Final answer: 1,304 / 4,305 = 0.303. But let me also consider: should I use 2022 beginning net debt or end net debt? The ratio is for 2022, and typically uses end-of-period balance sheet. Actually, for ratios like FFO/Net Debt, some use average net debt to match the flow (FFO) with average stock (debt). Average Net Debt = (4,104 + 4,305) / 2 = 4,204.5. FFO / Average Net Debt = 1,304 / 4,204.5 = 0.310. Or using end net debt: 0.303. I'll use end net debt as it's more common for leverage ratios. One more check: Is the period 2022 or 2023? The data says "2022-01-01 - 2023-01-01" which is the year 2022. And balance sheet "2023-01-01" is end of 2022. So FFO for 2022 / Net Debt at end of 2022 = 0.303. I'll express this as approximately 0.30 or 30%. But for precision, let me use 0.303. Actually, I want to try one more FFO calculation. From the statement of cash flows, a very direct FFO is: FFO = Cash generated from operations before working capital changes = EBIT + D&A - Cash taxes + Other non-cash = 687 (operating profit) + 724 (D&A) - 201 (cash taxes) + 157 (nonrecurring, if cash)? If nonrecurring 157 is cash: 687 + 724 - 201 + 157 = 1,367. If nonrecurring 157 is non-cash or not operating: 687 + 724 - 201 = 1,210. The 157 is "Result From Nonrecurring Transactions" - this could be gains on sale, restructuring, etc. The cash flow shows "Disposal Of Fixed Assets And Shareholdings" = 413 cash inflow. And "Adjustments For Losses Gains On Disposal" = -191 (gain of 191). So the nonrecurring 157 might include this 191 gain and other losses of 34, or be separate. Actually, 157 might be the net nonrecurring result, which includes the 191 gain minus some losses or expenses. For FFO, we typically exclude gains on asset sales as they're non-operating. So if 157 includes 191 gain, we should subtract the gain. FFO = 687 + 724 - 201 + (157 - 191) - 191? No, double counting. Let me just use: FFO = Operating cash flow + Interest paid + Tax paid - Working capital changes - Dividends paid? No, dividends are not in FFO. Actually, a very practical definition used by many practitioners: FFO = Operating cash flow + Changes in working capital Because operating cash flow already includes working capital changes, so this removes them? No, adds them back if they were negative. If operating cash flow = 1,260, and working capital changes were +835 (source), then: FFO before working capital = 1,260 - 835 = 425? Or if we define FFO as including sustainable working capital, we keep them. I think for utilities, working capital is somewhat predictable, so FFO often includes a normalized working capital change. But for simplicity, many use: FFO ≈ Operating cash flow + Interest paid (if classified as financing) + Tax paid? No, these are operating uses. Let me settle on: FFO = 1,304 (EBITDA - Cash taxes). This is conservative and standard. Or: FFO = 1,260 (Operating CF) + 75 (Interest, if we want to add back) + 201 (Taxes, if we want to add back) = 1,536? Then minus working capital source 835 = 701? No. I think the cleanest standard is FFO = Net income + D&A + Deferred taxes + Other non-cash items (Moody's). = 448 + 724 + 143 + (10 + 92 - 2 - 191 - 512 + other items) The "Other Adjustments For Noncash Items" = -512 is problematic. What is it? Looking at the cash flow, after all adjustments, we get to 1,260 operating cash flow. The -512 is a large negative adjustment. It might include: - Changes in fair value of derivatives - Foreign exchange differences - Other non-cash items If -512 is truly non-cash (not working capital), then FFO should add it back (i.e., subtract the negative, meaning add 512). Wait, the adjustment is -512, meaning it reduced cash flow. If it's non-cash, we add it back to net income. So in FFO, we include +512? No, the adjustment itself is what we add to net income. If the adjustment is -512, it means net income was higher by 512 due to non-cash items, so we subtract 512 to get to cash. For FFO, we want to add back non-cash reductions to net income. So if -512 is a non-cash expense (reducing net income but not cash), we add +512 in FFO. But -512 as "Other Adjustments For Noncash Items" - the negative sign suggests it's a non-cash gain or credit that increased net income. So we subtract it for FFO. So FFO = 448 + 724 + 143 + 10 + 92 - 2 - 191 - 512? = 712? That seems too low. Unless the -512 is offset by something else. Given the complexity, let me use a simpler approach that doesn't depend on parsing all adjustments: FFO = EBITDA - Cash taxes = 1,505 - 201 = 1,304. This is widely used, easy to calculate, and independent of working capital and other items. Net Debt = 4,305. FFO / Net Debt = 1,304 / 4,305 = 0.3029 ≈ 0.303. I'll provide 0.30 or 30.3%. Given the data precision, maybe 0.30 is appropriate. Actually, let me also calculate using 2021-2022 data to see if my FFO approach makes sense: 2021 EBITDA: 1,428 2021 Cash taxes: 165 FFO 2021 = 1,428 - 165 = 1,263 Net Debt 2021-01-01: Financial liabilities 5,068 - Cash 964 = 4,104? Wait, 2021-01-01 cash is 1,012. 2022-01-01 cash is 964. Net Debt at 2022-01-01: Debt 2022-01-01. Financial liabilities: 4,322 + 746 = 5,068. Cash: 964. Net debt: 4,104. FFO 2021 / Net Debt 2021-end = 1,263 / 4,104 = 0.308. Similar ratio. This gives me confidence that 0.30 is reasonable. For 2022: FFO = 1,304 / 4,305 = 0.303. I'll round to 0.30 or keep as 0.303. The question says "estimate", so some rounding is expected. Final answer: 0.30 (or 30.3% if expressed as percentage). I'll use decimal form: 0.303. Actually, re-reading the question, it asks for "FFO / Net debt ratio". This is typically expressed as a percentage in credit analysis (e.g., "FFO/Net Debt of 30%"). But as a ratio, it can be 0.30. I'll provide: 0.30 But let me see if I can be more precise. Using exact numbers: FFO = EBITDA - Cash taxes = 1,505,000,000 - 201,000,000 = 1,304,000,000 Net Debt = (5,867,000,000 + 1,022,000,000) - 2,584,000,000 = 4,305,000,000 Ratio = 1,304 / 4,305 = 0.3029036... Rounded: 0.303 or 30.3%. I'll use 0.30 as a reasonable estimate, or 0.303 for more precision. Given the instruction says "estimate", I'll provide 0.30. Wait, I want to check one more thing. Should "Other Current Financial Assets" of 14 be subtracted from net debt? In some definitions, yes if they're liquid. But 14 is small compared to 4,305. Impact: 1,304 / (4,305 - 14) = 1,304 / 4,291 = 0.304. Very similar. I'll stick with 0.303 or 0.30. 0.30